Thu, Jul. 23, 11:27 AM
- As was the case 3 months ago, security tech plays are up strongly (HACK +3.6%) after Fortinet (FTNT +12%) beat estimates, reported strong billings, and delivered above-consensus top-line guidance. The Nasdaq is up 0.3%.
- In addition to FireEye, Palo Alto Networks, and CyberArk (previously covered), gainers include Barracuda Networks (CUDA +6.4%), KEYW Holding (KEYW +4.5%), Symantec (SYMC +1.9%), Imperva (IMPV +7.6%), Proofpoint (PFPT +3.6%), Vasco (VDSI +4.5%), AVG (AVG +3.1%), and Qualys (QLYS +5.7%). AVG is benefiting a bullish JPMorgan coverage launch; Proofpoint reports after the close.
- JPMorgan's Sterling Auty has upgraded Fortinet to Overweight, and a slew of firms have hiked their targets. Auty argues Fortinet's numbers suggest its efforts to grow its high-end presence (aided by major sales investments in recent years), and forecasts free cash flow will rise 43% this year.
- On Fortinet's earnings call (transcript), CFO Drew Del Matto mentioned $100K+ deals rose 53% Y/Y and $1M+ deal 133% (compares with 40% total billings growth). He also mentioned the company's high-end FortiGate UTM/next-gen firewall appliances made up 45% of billings (a new high), and that U.S. enterprise sales (benefiting from strong cybersecurity spend) rose 90%. Major deals were struck with "two of the most recognizable technology brands in the world," as well as two large i-banks.
Tue, Jul. 7, 6:41 PM
- Bloomberg reports Symantec (NASDAQ:SYMC) is "nearing a deal" to sell its Veritas storage software unit (currently set to be spun off) to P-E firm Carlyle (NASDAQ:CG) for $7B-$8B. For reference, Symantec closed today with a $15.4B market cap.
- Deal terms are still being negotiated. Symantec hasn't been shy about its willingness to field offers for Veritas, which was acquired for $13B+ in 2005. Reuters reported in April tax concerns had hurt buyout interest.
- Symantec has risen to $23.40 AH. The company's Information Management ops had FY15 (ended in March) revenue of $2.56B (+1% Y/Y).
Mon, Jun. 22, 1:09 PM
- Citing a 70% YTD rally, UBS' Brent Thill has downgraded FireEye (FEYE -3%) to Neutral. Symantec (SYMC -1.5%), which is down 7% YTD, has been cut to Sell. Buy ratings have been reiterated (and targets hiked) for Palo Alto Networks and Fortinet, and a neutral rating reiterated for Check Point.
- Discussing cybersecurity stocks in general (HACK -0.1%), Thill (though still positive about end-market demand) argues the easy money has already been made following big 2015 gains fueled by well-publicized hacking incidents and rising corporate security IT spend. "All key players will lap a combination of tough comps and escalating execution expectations that will narrow the margin for error on the stocks."
- Separately, FireEye (hired to probe many a cyberattack) has identified a Chinese group it believes carried out a giant federal personnel records hack. FireEye: "Unlike other actors operating in China who conduct industrial espionage or steal defense technology, this group has primarily targeted [personally identifiable information]."
Fri, May 15, 2:07 PM
- Symantec (NASDAQ:SYMC) has fallen below $25 after missing FQ4 estimates and offering light FQ1/FY16 guidance. No downgrades have arrived in response.
- On the CC (transcript), the company blamed its FQ4 miss on an $8M increase in forex pressures relative to guidance - revenue fell 6% Y/Y in dollars, but was up 1% in constant currency - and an $11M true-up for employee defined benefit plans. It added FQ1 guidance would be higher if the quarter didn't have one less week than the year-ago period.
- Segment performance: Consumer security sales (hurt by competition and Microsoft's free offerings) remained under pressure in FQ4, falling 13% Y/Y to $438M (worse than FQ3's -11%). Enterprise security sales fell 6% to $491M, worse than FQ3's -4% and underperforming peers seeing strong growth amid rising corporate cybersecurity spend. The Veritas Information Management unit (set to be spun off) saw revenue fall 1% to $619M, after rising 1% in FQ3.
- Total license revenue rose 2% to $200M, while content, subscription, and maintenance revenue fell 7% to $1.35B. The deferred revenue balance fell 6% to $3.66B.
- Forex contributed to an 11% drop in international revenue to $758M; U.S. revenue fell 2% to $790M. In spite of lower sales, operating expenses fell to 56.2% of revenue from 56.5% a year ago thanks to cost cuts. $500M was spent on buybacks.
- FQ4 results, PR
Thu, May 14, 4:07 PM
- Symantec (NASDAQ:SYMC): FQ4 EPS of $0.43 misses by $0.01.
- Revenue of $1.55B (-6.1% Y/Y) misses by $10M.
- Expects FQ1 revenue of $1.5B-$1.54B and EPS of $0.41-$0.44, below a consensus of $1.62B and $0.45.
- Expects FY16 (ends March '16) revenue of $6.21B-$6.35B and EPS of $1.80-$1.90, almost entirely below a consensus of $6.38B and $1.90.
- Shares -3.4% AH
- Press Release
Mon, Apr. 13, 2:44 PM
- After surging before the close on Friday thanks to a WSJ report stating the company is exploring a sale of its Veritas storage software unit that (in the opinion of a source) could fetch more than $8B, Symantec (NASDAQ:SYMC) is now barely above its Thursday close.
- Likely playing a role: Reuters has followed up by reporting Symantec has been seeking buyers for Veritas, if not for the entire company, for months, and that "interest from potential buyers has been limited because of a tax burden associated with splitting the company." Symantec is said to have reached out to EMC, NetApp, and P-E firms.
- Analysts like the idea of a Veritas sale. Cowen: "Timing aside, we do believe that suitable buyers exist, with Oracle, NetApp, and EMC, the most likely strategic bidders, but PE also very possible ... Given Veritas’ low growth profile and tough competition, we believe this would be a good exit for SYMC..."
- Sterne Agee: "Both EMC and and NetApp have likely been afforded the opportunity to consider this acquisition before – we would be surprised if either vendor were to actively pursue this M&A."
- Jefferies: "We very roughly assume a $3bn tax basis and 40% tax on any gain on the sale of Veritas, which translates to $2bn in tax leakage on an $8bn transaction." The firm only values Veritas at $5B, but admits "low interest rates and high degrees of financial leverage present upside risk to our valuation."
- Meanwhile, a Piper Q1 security reseller survey found 38% stating their Symantec sales are below plan vs. 13% above plan. Moreover, for Q2, Symantec is said to have "the weakest [sales] pipeline of all vendors, with 50 percent of resellers expecting below normal seasonality."
Fri, Apr. 10, 4:01 PM
- The WSJ reports Symantec (NASDAQ:SYMC) is exploring a sale of its storage software unit. The business, once more known as Veritas, is set to be spun off by year's end.
- P-E firms and "possible industry bidders" have reportedly been contacted. One source states "potential buyers approached Symantec about Veritas before it began contacting possible bidders" while adding the business could fetch more than $8B; Symantec currently sports a $17.2B market cap. Taxes related to a sale are seen as a potential roadblock.
- Symantec, whose storage software ops saw revenue rise only 1% Y/Y in FQ3 amid tough competition, has shot higher on the report. The company's analyst day arrives on April 17, and its FQ4 report on May 14.
Oct. 10, 2014, 3:31 PM
- While calling Symantec's (NASDAQ:SYMC) decision to split its security and storage software ops into separate companies "an important step in fundamentally fixing the company," Morgan Stanley's Keith Weiss (Underweight) also thinks it increases near-term execution risk.
- Weiss: "While Symantec needs to expend significant energy and focus on fixing the structure of the company, integrating existing technologies and increasing its pace of innovation, the markets it addresses are rapidly evolving."
- Raymond James' Michael Turtis is more positive, upping shares to Outperform. While agreeing execution risks (along with strategic business risks) are high, he values Symantec at $25/share on a sum-of-the-parts basis if its units remain publicly traded, and $28/share if the storage unit becomes an acquisition target.
- Credit Suisse's Phil Winslow (Outperform) believes at least two potential suitors could exist for Symantec's storage software ops, and suspects the business could fetch $9B (still 21% less than Veritas' enterprise value at the time of the merger).
- Ratings agencies have put Symantec's debt on review for downgrade. They did the same for H-P following its split announcement.
- Shares have dived towards $22 on a day the Nasdaq is down 1.9%.
Oct. 9, 2014, 4:40 PM
Aug. 6, 2014, 4:21 PM
- Though it beat FQ1 estimates, Symantec (NASDAQ:SYMC) is guiding for FQ2 revenue of $1.6B-$1.64B and EPS of $0.40-$0.44, unfavorable to a consensus of $1.63B and $0.45. FY15 (ends March '15) guidance is for revenue of $6.63B-$6.77B and EPS of $1.84-$1.92, in-line with a consensus of $6.69B and $1.88.
- License revenue tumbled 15% Y/Y in FQ1 to $161M. Content, subscription & maintenance revenue rose 4% to $1.57B. Symantec's deferred revenue balance fell 4% to $3.71B.
- Information Security (enterprise security) revenue +3% Y/Y to $345M, user productivity/protection (PC/mobile security) +1% to $740M, information management (storage software) +1% to $650M. User productivity/protection made up a majority of segment op. profit ($270M out of $427M).
- Opex was 58.7% of revenue vs. 58.4% a year ago. $125M was spent on stock repurchases.
- SYMC +0.3% AH. FQ2 results, PR.
Aug. 4, 2014, 10:20 AM
- The Chinese government's procurement agency has warned departments not to use antivirus software from Symantec (SYMC -0.6%) and fellow U.S. supplier Kaspersky Lab.
- Qihoo (QIHU +3.4%), which has a giant share of the Chinese antivirus software market, is rallying, though it's worth noting several other Chinese tech companies are also doing well.
- Previously, China's Public Security Ministry had warned Symantec's Data Loss Prevention software had security loopholes that could enable outside access. As in several other regions, NSA-related tensions have been running high in the Middle Kingdom. Local authorities have also launched an anti-monopoly probe against Microsoft.
- The whole of Asia-Pac accounted for 17% of Symantec's FQ4 revenue. FQ1 results arrive on Wednesday.
May 14, 2014, 5:38 PM
May 8, 2014, 4:15 PM
- Symantec (SYMC) expects FQ1 revenue of $1.65B-$1.69B and EPS of $0.41-$0.43 vs. a consensus of $1.64B and $0.43. FY15 guidance is for revenue of $6.63B-$$6.77B and EPS of $1.84-$1.92 vs. a consensus of $6.69B and $1.83.
- FQ4 segment data highlights ongoing share losses: User productivity/protection (PC/mobile security software, 43% of revenue) -6% Y/Y vs. -4% in FQ3. Information management (storage software, 38% of revenue) -7% vs. -6%, infomration security (enterprise security, 19% of revenue) -2% vs. -3%.
- Thanks to job cuts, opex fell to 56.4% of revenue from 58.7% a year ago. Gross margin fell 30 bps to 83.9%, and $125M was spent on buybacks.
- Symantec thinks it can achieve a 30% op. margin by FY15's fourth quarter, up from 27.3% in the last quarter.
- Expectations were fairly low after shares tumbled in response to Steve Bennett's firing.
- FQ4 results,.PR
May 8, 2014, 4:06 PM
Apr. 11, 2014, 9:48 AM
- Corning (GLW -1.4%) has been cut to Neutral by UBS.
- Symantec (SYMC -1.3%) has been cut to Equal Weight by Barclays.
- TE Connectivity (TEL +1.3%) has been upgraded to Buy by BofA/Merrill.
- Imperva (IMPV +1.6%) has received a contrarian upgrade to Buy from Sterne Agee a day after falling 44% due to its Q1 warning.
- Demandware (DWRE +0.9%) has been upgraded to Outperform by BMO.
- Ellie Mae (ELLI -5%) has been cut to Market Perform by FBR.
Apr. 4, 2014, 4:02 PM
- JPMorgan will advise Symantec (SYMC +1.1%) on exploring strategic options and defending itself against would-be activist investors, sources tell Bloomberg.
- Reuters is out with a similar report, but doesn't explicitly state which bank Symantec is hiring. It does, however, report major activist funds "have already started examining the company as a potential target."
- Shares plunged to new 52-week lows two weeks ago after Symantec fired CEO Steve Bennett. Bennett moved aggressively to cut costs and streamline Symantec's enormous product line, but failed to invigorate growth and halt security/storage software share losses to rivals large and small.
- Symantec has closed higher on a brutal day for tech stocks.
SYMC vs. ETF Alternatives
Symantec Corp provides security, backup and availability solutions. Its products and services protect people and information in any environment, from the smallest mobile device, to the enterprise data center, to cloud-based systems.
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