Symantec (SYMC) Slides After Poor Second Quarter Earnings

Antivirus software maker Symantec (SYMC) slid last week, after the company reported its second quarter earnings for fiscal 2014. The company reported adjusted earnings of $0.47 per share, a 16.7% year-over-year gain which easily topped the consensus estimate of $0.40. Revenue, however, declined 3.7% to $1.64 billion and missed the analyst forecast of $1.68 billion. Daily Chart

Symantecâ s revenue from content, subscriptions, and maintenance -- which comprise 92% of its top line, stayed flat year-over-year at $1.49 billion, but license revenues, which account for the other 8% of its total sales, plunged 31.3%.
The company also racked up losses across the board -- revenue from its User Productivity and Protection division declined 3%, due to weakness in its Endpoint Management segment. Sales at its Information Security division fell 2%, due to weak demand for its e-mail, web, and data security software, which offset slight improvements in its authentication and MSS businesses. Symantecâ s information management revenue slid 5% due to losses in the Backup Exec and information availability businesses, which offset gains in NetBackup appliances. Demand was poor across developed markets, with the Americas posting a 3% revenue decline and the Asia-Pacific region posting a 14% decline. Meanwhile, sales in the EMEA (Europe, Middle East, and Africa) region remained robust, with a 4% top line gain which was not nearly enough to offset other global losses. Symantecâ s adjusted gross margin declined from 96 basis points to 83.5%, due to a higher mix of appliances and hosted solutions. Adjusted operating margins, however, rose 86 basis points to 25.2%, as a result of decreased operating expenses. Looking forward, Symantec expects third quarter revenue between $1.63 billion to $1.67 billion, compared to $1.79 billion in the prior yearâ s third quarter. Non-GAAP earnings per share are expected to come in between $0.41 to $0.43 per share, compared to $0.45 in a year earlier, and will miss the consensus estimate of $0.47 per share. Symantecâ s results were similar to the rest of the security software industry â " slumping PC sales, increased competition from Intelâ s (INTC) McAfee division and Microsoft's (MSFT) built-in anti-virus software could wreak havoc on third-party anti-virus vendors. Symantec stock is up 17% over the past twelve months. It is trading at 11.2 times forward earnings with a 5-year PEG ratio of 1.34 -- indicating that it could be both undervalued fundamentally and be well-positioned for better days ahead. Other News About Symantec Symantec sales forecast falls short of estimates Symantec slumps as revenue falls across the board. Symantec forecast misses estimates as PC market weakens Is it time to blame Wintel for Symantecâ s woes? Other Stocks in the News Starbucks starts throwing a very big tea party Will Starbucksâ new tea shops match the popularity of its coffee shops? Same old Amazon: all sales, no profit Will Amazon ever make a profit? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Oct 31, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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