Symantec Corp. (SYMC) shares fell after the biggest maker of security software forecast fiscal first-quarter sales and profit that may miss estimates as a slump in the personal-computer market weighs on its consumer business.
Revenue in the current period, which ends in June, will be $1.61 billion to $1.65 billion, Symantec said yesterday on a conference call. Profit excluding some costs will be 35 cents to 36 cents a share. Analysts on average had projected sales of $1.7 billion and profit of 44 cents, according to data compiled by Bloomberg. Shares fell as much as 10 percent in late trading.
Chief Executive Officer Steve Bennett has cut jobs and consolidated sales functions amid a push to wring more business from consumers and corporations at a time when PC demand is shrinking. Growth in Symantec’s other businesses, such as data storage, hasn’t made up for the decline in PC shipments, which had their biggest drop on record in the first three months of the year. The company is reviewing its bundling contracts with PC makers, and cancellations may hurt results, Bennett said.
“The Q1 view is a little more conservative than we had been looking for,” said Jonathan Ho, an analyst at William Blair & Co. in Chicago, who has an outperform rating on the stock. “Just having new management in place does not change the fact that the PC headwinds are there. Now it’s about reinvigorating the rest of the business and executing the rest of the strategy.”
PC Slump
Symantec shares fell as low as $22.50 in extended trading after the company gave its first-quarter forecast. They rose less than 1 percent to $25.10 at yesterday’s close in New York. The stock has climbed 91 percent since Bennett was appointed in July, after Symantec’s board ousted his predecessor, Enrique Salem.
In the first three months of 2013, PC shipments fell 14 percent worldwide as consumers opted to purchase smartphones and tablets instead and a new operating system from Microsoft Corp. failed to attract buyers, researcher IDC said last month. The decline is putting pressure on Mountain View, California-based Symantec, which got 30 percent of revenue from sales of consumer-security products in the fiscal fourth quarter, which ended March 29.
Fourth Quarter
Profit before certain costs in the fourth quarter rose to 44 cents a share, and sales increased 4 percent to $1.75 billion, Symantec said in a statement. On average, analysts projected profit of 38 cents and revenue of $1.73 billion, according to data compiled by Bloomberg. The company also initiated a quarterly dividend of 15 cents a share.
Net income fell to $188 million, or 26 cents a share, from $559 million, or 76 cents, a year earlier, Symantec said.
Hacking attacks are getting more frequent, disrupting the operations of major U.S. banks earlier this year for a record 249 hours. Attacks on a dozen European banks last year led to the theft of tens of millions of dollars from customers’ accounts, Bloomberg News reported this week.
The increased sophistication of the attacks is driving demand for security technologies in an industry that Gartner Inc. estimates will reach $65.7 billion this year.
Still, the high-profile attacks haven’t provided a big boost to Symantec’s consumer-security business. Sales in the consumer division rose 1 percent in the recent period. Its storage and server-management unit saw revenue gain 7 percent, with that business making up 36 percent of total sales.
Sales in Symantec’s Norton consumer-security business should be little changed for at least the next several years, hurt by declining PC sales, Bennett said.
Bloomberg News reported in January that Bennett planned to eliminate 1,000 jobs, about 5 percent of the staff, as part of a plan to cut costs and jump-start profit growth.
Symantec’s profitability has suffered as the company has resisted calls to sell or spin off its slower-growth data- storage division. Operating income in that business declined 9.6 percent from 2010 to 2012, according to data compiled by Bloomberg.
Source: Bloomberg
