How Much Could Norton 2010 Help Symantec Stock?

Includes: CA, MFE, MSFT, SYMC
by: Trefis

Symantec (NASDAQ:SYMC), which competes with McAfee (MFE), CA (NASDAQ:CA), AVG, TrendMicro and Kaspersky Labs, leads the consumer anti-virus market with 52% share, driven by its Norton Software. Symantec’s share in the consumer antivirus market has been declining over the past few years, and we expect this trend to continue.

Norton 2010, the newest version of Norton, promises enhanced features and faster speed over the previous versions. A successful Norton 2010 could stop market share declines for Symantec, and could further lead to $1 (4%) upside to the $24 Trefis price estimate for Symantec’s stock.

Below we discuss the reasons for Symantec’s market share declines in the consumer antivirus software market, and how stable market share could lead to a slight upside in Symantec’s stock price.

Symantec’s Market Share Has Declined to 52%

We estimate Norton antivirus to constitute around one-third of the Trefis price estimate for Symantec’s stock. Norton has seen a decline in its market share from 56% in 2005 to 52% in 2009.

Below are some of the main the factors that have led to Norton’s market share decline:

  1. Norton has the reputation of slowing PC performance.
  2. Norton products have a tedious un-installation process, leaving behind traces of software.
  3. Norton is priced higher compared to Microsoft’s (NASDAQ:MSFT) Security Essentials and AVG’s antivirus product, which are being offered for free.

Improved Norton 2010 Features Can Stop Market Share Declines For Symantec

Symantec’s newest version of Norton has enhanced features and fixes for performance related issues faced by previous versions. We believe that Norton 2010, if successful, can stop market share declines in the future.

1. Reputation-based check removes virus before entering PC

Norton 2010 makes virus and spam detection more accurate by using behavior or reputation-based check rather than the traditional signature-based check. With the new technology, every file or email is first checked against Symantec’s server, which stores a large number of data on virus types gathered from its consumers over the years.

If the file or email is found to be infected, the virus is removed immediately before it enters the PC. This proactive approach reduces the likelihood that infected files make it onto the PC.

2. Faster virus scans and leaner PC resource utilization

Norton Antivirus 2010 makes virus scans on PCs faster by skipping scans on known files. Instead of checking each application against more than 500,000 viruses, the software zips through scans looking only for “virus-like” behavior.

Norton Internet Security 2010 also promises to be much faster in terms of installation time and much leaner in utilization of PC resources.

Market Share Stabilization Would Mean $1 Upside to SYMC Stock

If Symantec’s Norton anti-virus market share were to stabilize rather than decline as we have forecast, it could mean a $1 gain to the $24 Trefis price estimate for Symantec’s stock.

You can modify our forecast above to see how Symantec’s stock would be impacted if its market share were to remain flat or increase instead of decline as we forecast. You can also see the average Trefis community forecast here for Symantec’s market share in the consumer antivirus software market. Select the compare button below the chart and plot community average.

Disclosure: None