Symantec (SYMC) is expected to report Q2 earnings after the market close on Wednesday, October 26, with a conference call scheduled for 5:00 pm ET.
The consensus estimate is 39c for EPS and $1.66B for revenue, according to First Call. The company has beat or met earnings the last six quarters. Guidance provided on its last earnings call was for Q2 EPS of 38c-39c on revenue of $1.655B-$1.675B. Deferred revenue is expected to be in the range of $3.485B-$3.515B. Recent results from other security and storage players like Websense (WBSN) and EMC (EMC) certainly point to robust demand in these areas.
Citigroup is expecting solid Q2 results despite some currency headwind. The firm expects revenues to be in-line with its estimates of revenue of $1.672B and EPS of 39c, with some potential for upside to Citi's +1 year-over-year billings growth estimate. Citigroup's inputs suggest execution across enterprise continues to improve, especially in enterprise security which is 68% of revenues where products have improved and competition appears less aggressive. The firms believes consumer trends appear stable with up-sell/renewal rate improvements still likely benefiting. In storage, Storage Foundation is stable, although still declining and Net Backup continues to have good momentum with up-sell of add-on options likely to drive license growth while Back-up Exec is slowing as expected as it enters the back-end of the product cycle and server shipment comps get tougher. Hiring remains healthy, suggesting no near-term margin upside. Also, management has consistently noted it isn’t looking to expand margins as it invests to grow.
Going forward, Symantec's Q3 guidance could feel the strain of a tough economy. Citi sees $20M-40M and 1c-2c of EPS risk to its 39c/$1.75B estimates due to currency in Symantec’s Dec. quarter guidance. However the firm remains comfortable with organic, CC 1% billings growth. Conference call highlights: comments on potential for margin improvements; organic billings growth views; and commentary on macro and geographies.