Earnings Preview: Symantec

Symantec (SYMC) is expected to report Q1 earnings Wednesday, July 30 after market close, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 35c for EPS and $1.57B for revenue, according to First Call.

Analyst Views

On June 12, Symantec reaffirmed its Q1 forecast at its analyst day. The company sees Q1 EPS of 34c to 36c and revenue of $1.56B to $1.6B. Guidance for deferred revenues of $2.91M to $3.01M implies bookings growth of about 7%, or 3% excluding the impact of the extra week in Q1. The consensus operating margin forecast is 27.5% and a 31% tax rate. Stifel said that despite some signs of weakening from the economy, that growth rate seems conservative to them in light of the fact that the U.S. dollar is weaker than Symantec projected and 1Q09 includes the Vontu and Appstream acquisitions, while 1Q08 did not. Stifel said that Q1 is the first full quarter of the Huawei joint venture, which could be a source of surprise. However it would have to be more than $10M worse than Stifel's forecast of a loss of $5M in order to impact Q1 EPS.

July 9, Cowen had comments on the Software space, seeing the first real signs of end-market demand weakening in Q2. Cowen had recommended avoiding back-end-loaded models like Symantec and a few others.

Key issues for the conference call: Guidance going forward; commentary on recent acquisition integration and further M&A plans; and an update on competition.