Earnings Preview: Symantec Corp.

Symantec Corp. (SYMC) is expected to report Q2 earnings after the market close on Wednesday, October 28 with a conference call scheduled for 5 pm ET.

Guidance

The consensus estimate is 33c for EPS and $1.43B for revenue, according to First Call. Guidance provided by management on its last earnings call was for Q2 EPS of 32-34c on $1.4B-$1.45B in revenue.

Analyst Views

Credit Suisse believes that although Symantec has clearly underperformed revenue expectations for the past two quarters, the company’s guidance for the September quarter is achievable. The firm's current estimates for Symantec’s Q2 are: 34c, $1.44B in revenue and a sequential decline in overall license revenue of 4.3%. All estimates are slightly ahead of consensus. While Symantec could provide revenue guidance slightly below consensus for the December quarter, Credit Suisse believes that FY10 and FY11 EPS estimates are no longer biased to further downside. Additionally, they feel limited downside exists to management’s FY10 margin outlook. If Symantec effectively executes on its product roll-outs and sales force strategy, Credit Suisse believes forward estimates could be steadily revised upward over the next 12 months. Symantec will be refreshing a large portion of its suite of products over the next three to 15 months. Credit Suisse believes that these upcoming product refreshes will improve existing functionalities and add innovative features that will allow it to better compete for market share.

Despite the downward trajectory of sales force productivity since merging the Symantec and VERITAS sales force, the firm remains encouraged by certain recent changes in the sales compensation structure. The focus is on license revenue growth, as well as the potential to separate sales teams for security and storage solutions, which it believe could ultimately increase sales force productivity. For the December quarter, Credit Suisse forecasts 38c, $1.49B in revenue and overall license growth of 17.2% sequentially, versus consensus of 37c on $1.5B in revenue.