Symantec Reports Wednesday: A Buyout Looks Like the Only Option

Symantec (SYMC) reports earnings after the close on Wednesday and we have no idea what it will be like. What we do know is that the situation in the field for Symantec is going from bad to worse.

Our most recent report was produced in partnership with TheInfoPro which collects input from enterprise customers to understand fundamental technology shifts within IT. The data for Symantec has been declining steadily for some time and has recently accelerated on the downside. If the current trends continue, Symantec spending intentions will suggest an actual YoY decline for the first time since data started being collected back in 2003.

The root of the problem lies in the lack of execution between management vision and the company acquisitions and the customer. Products haven’t been integrated. The sales teams have suffered from lack of training and high turnover. Customers are relating horror stories regarding technical support and customer service.

Our report details a bit more of the data and delves into valuation using typical approaches along with our own long-term valuation framework and the forensic accounting of New Constructs. The net result is a fair value of about $14/share.

The only good news for shareholders is that the stock is already trading at a level where an acquisition by CA (CA), HP (HPQ) or BMC (BMC) would work. That’s the only positive scenario we see now, given that management hasn’t even acknowledged the depth of the issues, let alone start solving them (Dell (DELL) is at least past the acknowledgment stage and is working on solutions.)

Based on what we see, one would expect conservative guidance on Wednesday and an interesting Analyst Day on June 12th.

Comments

[User 168812]

Are you kidding me? They've beat their estimates for 3 quarters straight.

[belmontboy]

Hey Kris,
by any chance do u own CA, HP or BMC shares?

[user 3721]

what is the purpose of bashing a company right before its earnings? where is the fact that "The data for Symantec has been declining steadily for some time and has recently accelerated on the downside."? The "TheInfoPro" you linked is no more than just a site with no data related to Symantec. In fact, I have seen contrary results indicating the company is well in its way in turning things around. And what is your valuation method to support a fair value of $14? If just because you think so, I say the share price should go to the 20s by end of year. Stop making claims without using facts to support them.

[fat packer]

From inside the Chaos, everywhere you turn rats jumping from a sinking ship. come on RIF baby

[MollyCat]

Earnings just out...wow, I guess you were really wrong!!!

[belmontboy]

bite the dust Kris.

[sesj]

Why do people hate Symantec so much. I have followed them now since they took Veritas over and they have, except for one time, beaten market expectations. They have a solid sales force, but struglle a little on their Support of products. Overall however they have exceptional focus and sound business strategy.
HP and CA could take a few tips from them.
Kris, what planet do you come from?

[BootJT]

Kris is dead on ! Don't get fooled by the numbers and guidance ! They are making those numbers by actually reducing cost by RIFs. Just before the quarter is coming to end, they are RIFing people. This approach will end of loosing many key people from the company and it would be worth more like $3/share (no I don't have the science - it is just a random number - no different than $19 it is trading now.) Some of the recent acquisitions are also questionable, as they already have products with such capabilities in-house. They didn't have to go out and buy duplicate products.

[humble-techie]

BootJT should change his pseudonym to better reflect what he is shoveling out. While there have been RIFs in the past, there is no evidence that any such action was taken over the last quarter. Quite to the contrary, all evidence points to an outstanding sales effort. I especially love "Don't get fooled by the numbers and guidance". Right, we should all base our investment strategies on
tea-leaves and the pattern of cracks in dried animal bones. Althought, to be fair it should be pointed out that these forms of prognostication appear to be more efficacious than Kris'

[User 188545]

I had heard about sleep walking, but this is akin to sleep writing. Wake up Kris!

[BootJT_Hurts]

BootJT is likely either an unhappy insider or a recently RIF'd ex-employee, based on my read. JT has done reasonably well with Symantec across a number of years, and whilst those of us holding shares may like to see JT move on soon, the fact is that the company is doing well, even though it could do better of course. And guess what? Symantec is a big corporate. RIF's are merely a fact of life. Get over it and go watch the start-ups if you can't handle that.

[hipster09]

Kris, your vision for this company is like your photo, fuzzy and out of focus. Symantec is sitting on a lot of cash. They have bought back a lot of stock to add value. They are also doing all the right things to make their products very competitive going forward. They will continue to be market leaders in the data protection and security sector for a long time. Thanks for the bogus buyout rumors anyway.

[newEnglander]

Let's get the facts here:

Symc is the 4th largest independent software company in the world. It manages 45% of the data in the world. It monitors over 30% of world email. It is # 451 or so on the latest Fortune 500 list and is the 4th most admired software company in the world. Stock is trading around $20 dude!

From what I have seen and heard at least in the New England area the turnover is less than 5% in the sales force.


Humbly yours!

[Lara Del Pin]

Working for Symantec (7 years now) and reading this article is like reading about another Company! What we feel as individual contributors @ Symantec is definitley: strong (very strong, indeed) product integration; a solid guidance from our senior, top and intermedaite management; a pervasive sense of execution; an increasing Customers and Partner sitisfaction about solution, services and tech support; the immediate feeling of being part of a leading software Company with an incredible outlook on the future and a clear Vision! You sure you are talking about Symantec and not CA?!?!?!
By the way: my percetion comes for a very remote office....I guess those feelings and facts are even stronger the closer you get to our head offices in California!

Lara