Shares of security software giant Symantec Corp. tumbled 13% to $17.79 yesterday after the company warned that Q3 profit and sales results will miss forecasts. Symantec also revised its full-year outlook downward. This is the second consecutive quarter that the company has missed forecasts. Symantec lowered its Q3 revenue range to $1.29-1.31 billion, shy of the Street's expectation of $1.35 billion, and its EPS range for the period to $0.10-0.11 versus a $0.14-0.15 forecast. For fiscal 2007, the company expects a revenue range of $5.08-5.11 billion with EPS of $0.36-0.39 against an earlier forecast of $0.46-0.56 EPS on revenue of $5.1-5.3 billion. Symantec overestimated revenues it would earn from software to maintain data centers, and weak license sales led to a higher proportion of revenue from long-term maintenance contracts, effectively deferring sales into future quarters. The company was also surprised by the magnitude of expenses associated with installing a new software system. Symantec's miss follows disappointing results from software makers SAP AG and Oracle Corp., reflecting a general pullback in corporate spending on IT.
• Sources: Forbes, Bloomberg, Reuters, MoneyCentral
• Related commentary: Sorting Symantec's Mess: Investors Concerned More Bad News To Follow, Symantec's Warning: Some Unresolved Questions, Symantec's A Short Following Weak Data Point, Symantec Tumbles On Warning
• Potentially impacted stocks and ETFs: Symantec Corp. (SYMC). Competitors: CA, Inc. (CA), McAfee Inc. (MFE), Microsoft Corp. (MSFT). ETFs: iShares Goldman Sachs Software Index (IGV), Software HOLDRs (SWH), streetTRACKS Morgan Stanley Technology (MTK), Internet Architecture HOLDRs (IAH)
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