July 28, 2005 5:40 PM PDT
Symantec to change consumer product launches
The company reported a mixed quarterly performance that beat Wall Street earnings expectations but fell short on revenue estimates. Investors pushed Symantec's stock slightly lower in after-hours trading to $22.39 a share from $23.79 a share during the regular close.
Symantec, which historically introduces new consumer products and upgrades in September, will now deliver the products throughout the year. This move comes as the security company seeks to remain competitive amid an increasingly crowded consumer field that will soon include Microsoft's OneCare antivirus, anti-spyware and firewall service offering, which is expected to debut later this year.
"We will refresh the products as we always have, but...we'll do it more than once a year," John Thompson, Symantec chief executive, said during a conference call with analysts. "Our anti-spyware is a good example of this. We could have shipped it earlier, but we had to wait for the packaging that we do with new releases. Instead, we could have done a live update for our anti-spyware."
Spyware has increasingly become a pervasive menace, and industry observers and Symantec's investors have previously questioned how the company will position itself against Microsoft. Symantec's competitors, meanwhile, had come out with their own anti-spyware offerings for consumers, a group that accounts for slightly more than half of Symantec's revenues.
During the quarter that ended July 1, Symantec reported revenues of $700 million, up 26 percent from the previous year. Analysts, however, had expected the company to generate $712 million for the quarter, according to Thomson Financial, which tracks analyst estimates.
Consumer sales accounted for 51 percent of first-quarter revenues and grew 28 percent over last year. Enterprise sales accounted for 49 percent of revenues and increased 23 percent, compared with year-ago figures.
Symantec, which earlier this month closed its mega-merger with Veritas Software after the first quarter ended, did not combine the companies' revenues for the quarter just ended, but did share some of the storage company's stand-alone figures for the three-month period.
Veritas reported revenues of $529 million in the June quarter, up 9 percent from year-ago figures. The storage company closed 253 deals that were worth $100,000 or more, of which 19 were for transactions in excess of $1 million each.
Symantec, which acquired Veritas in part to land larger deals with corporate customers, secured 274 contracts for deals worth $100,000 or more--of which 15 were for transactions worth more than $1 million each. The number of Symantec's large deals increased by 22 percent in the quarter over year-ago figures.
In the post-merger environment, customers of the combined company have responded well, Thompson said. He added the company is also moving forward with its integration efforts.
"Our team is focused on innovation and execution," Thomson said.
But Wall Street was slightly disappointed with Symantec's results. In previous quarters, the company has beat analysts' estimates and raised its guidance for financial performance in the current quarter, Gene Munster, a senior research analyst for PiperJaffray, said in a research note Friday.
But Symantec not only missed Wall Street's first-quarter revenue estimates but also lowered its revenue forecast by 4 percent for fiscal 2006 and issued projections that its earnings for the fiscal year would reach 99 cents a share. Analysts had expected the company to post earnings of $1.04 per share for the year.
"Yesterday's results highlight that two critical challenges are ahead of Symantec over the next three quarters," Munster said in his research note. "The company is faced with integrating the Veritas sales force and the potential launch of the Microsoft consumer product."
Symantec, however, beat analysts' earnings estimates for its first quarter, which ended July 1. The company reported earnings of $199 million, or 27 cents a share, compared with $117 million, or 16 cents a year ago. Analysts had expected the company to report net income of 25 cents a share, according to Thomson Financial.
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