Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Risk

7/26/2007
04:30 AM
50%
50%

Symantec's Mixed Bag

Profits fall, but revenue rises, as Symantec gears up for a tussle with Google

Symantec suffered falling profits in its first quarter results last night, despite solid growth in its storage and data center software business. (See Symantec Reports Strong Q1.)

The software specialist, which is currently in the middle of a major restructuring, saw profits fall 5.3 percent from the same period a year ago. On a conference call last night, Symantec execs explained that profits were impacted by a $19 million restructuring charge related to workforce reduction and real estate consolidation efforts.

Revenues were a different story, rising 11 percent to $1.4 billion from $1.27 billion, comfortably beating analyst estimates of $1.32 billion.

On a GAAP basis, earnings per share were 10 cents, flat compared to the same period last year. Symantec's net income for the quarter was $95 million, compared to $101 million in the year-ago quarter.

Non-GAAP earnings per share were 29 cents on net income of $263 million, up from 24 cents and $253 million in the first quarter of 2006. Analysts had estimated earnings of 20 cents.

Notably, Symantec's storage and data center software products and services saw a 5 percent growth in revenue (to $399.2 million) over the same period a year ago. CEO John Thompson attributed the first quarter's results partially to strong sales of the NetBackup product, which came out of the Veritas deal. Growth in sales was due to "customers’ desire to standardize and simplify the data center," he said. (See Symantec Bolsters Backup, Symantec Unveils NetBackup 6.5, and Symantec Enhances PureDisk.)

TBR analyst Melissa Grady agrees that NetBackup, which was recently overhauled by Symantec, will continue to prove crucial to the vendor's performance. "A number of upcoming product releases and updates, including Symantec Endpoint Protection 11.0 and NetBackup 6.5, will ensure continued revenue growth in consumer and enterprise businesses for the remainder of 2007," she wrote in a note released this morning.

The analyst also pointed to the recent OEM deal between Symantec and XenSource as a significant strategic move, coming at a time when users are attempting to tie server and storage virtualization together. (See Symantec Drifts Into Xen, XenSource Signs Symantec OEM, and Storage Virtualization Edges On.) "It will be mutually beneficial that they can point customers to another server/storage virtualization source other than VMware and EMC."

Growth in the Data Center Management Group (DCMG) represents something of a coup for Symantec. The vendor has been sharply criticized by analysts since its 2005 $13.5 billion acquisition of Veritas, which saw a host of technology integration issues. (See Symantec Slips on Storage , Symantec Struggles Continue, and Symantec Adds Reporting.)

Analysts also had a beef with the company’s move to expand from its consumer-based security product comfort zone into the enterprise arena with data center products and services. In fact, third quarter '07 results saw an 8 percent decline in year over year revenues of the (DCMG), and there was no growth in the quarter ending in March. (See RAD Data Intros Website.)

Thompson also credited the company's strong performance and outlook to the acquisition of Altiris, which enables enterprise users to mange software on mobile devices. (See Symantec Picks Up Altiris and Symantec Faces 'Truth'.)

Despite solid storage growth and the positive impact of the Altiris acquisition, Symantec may also face a looming challenge in the security area, according to TBR analyst Grady. (See Google Plucks Postini and Google Acquires Postini.) "We believe that Google's recent acquisition of Postini will position the company to compete against Symantec in the security as a service (SaaS) market in 2008," wrote Grady, explaining that the search giant is likely to build security features into Gmail and Google Apps. "We believe that as the two companies reach for new market opportunities with small and medium business, Symantec will soon find itself in competition with Google."

In early trading today, Symantec's shares rose 20 cents (1 percent) to $20.26.

— Rivka Little, Special to Byte and Switch

  • Altiris Inc. (Nasdaq: ATRS)
  • EMC Corp. (NYSE: EMC)
  • Google (Nasdaq: GOOG)
  • Postini Inc.
  • Symantec Corp. (Nasdaq: SYMC)
  • Technology Business Research Inc. (TBR)
  • VMware Inc. (NYSE: VMW)
  • XenSource Inc.

    Comment  | 
    Print  | 
    More Insights
  • Comments
    Newest First  |  Oldest First  |  Threaded View
    News
    Inside the Ransomware Campaigns Targeting Exchange Servers
    Kelly Sheridan, Staff Editor, Dark Reading,  4/2/2021
    Commentary
    Beyond MITRE ATT&CK: The Case for a New Cyber Kill Chain
    Rik Turner, Principal Analyst, Infrastructure Solutions, Omdia,  3/30/2021
    Register for Dark Reading Newsletters
    White Papers
    Video
    Cartoon
    Current Issue
    2021 Top Enterprise IT Trends
    We've identified the key trends that are poised to impact the IT landscape in 2021. Find out why they're important and how they will affect you today!
    Flash Poll
    How Enterprises are Developing Secure Applications
    How Enterprises are Developing Secure Applications
    Recent breaches of third-party apps are driving many organizations to think harder about the security of their off-the-shelf software as they continue to move left in secure software development practices.
    Twitter Feed
    Dark Reading - Bug Report
    Bug Report
    Enterprise Vulnerabilities
    From DHS/US-CERT's National Vulnerability Database
    CVE-2021-31414
    PUBLISHED: 2021-04-16
    The unofficial vscode-rpm-spec extension before 0.3.2 for Visual Studio Code allows remote code execution via a crafted workspace configuration.
    CVE-2021-26073
    PUBLISHED: 2021-04-16
    Broken Authentication in Atlassian Connect Express (ACE) from version 3.0.2 before version 6.6.0: Atlassian Connect Express is a Node.js package for building Atlassian Connect apps. Authentication between Atlassian products and the Atlassian Connect Express app occurs with a server-to-server JWT or ...
    CVE-2021-26074
    PUBLISHED: 2021-04-16
    Broken Authentication in Atlassian Connect Spring Boot (ACSB) from version 1.1.0 before version 2.1.3: Atlassian Connect Spring Boot is a Java Spring Boot package for building Atlassian Connect apps. Authentication between Atlassian products and the Atlassian Connect Spring Boot app occurs with a se...
    CVE-2018-19942
    PUBLISHED: 2021-04-16
    A cross-site scripting (XSS) vulnerability has been reported to affect earlier versions of File Station. If exploited, this vulnerability allows remote attackers to inject malicious code. We have already fixed this vulnerability in the following versions: QTS 4.5.2.1566 build 20210202 (and later) QT...
    CVE-2021-27691
    PUBLISHED: 2021-04-16
    Command Injection in Tenda G0 routers with firmware versions v15.11.0.6(9039)_CN and v15.11.0.5(5876)_CN , and Tenda G1 and G3 routers with firmware versions v15.11.0.17(9502)_CN or v15.11.0.16(9024)_CN allows remote attackers to execute arbitrary OS commands via a crafted action/setDebugCfg request...