Symantec earnings show lackluster enterprise growth

Symantec's latest quarterly earnings show that the company's consumer business is growing faster than its enterprise group.

Two years after its acquisition of enterprise software vendor Veritas, Symantec's consumer division remains the company's fastest-growing product line.

Consumer business grew by about 10 per cent year-over-year and represents about 30 per cent of Symantec's overall business, the company said Wednesday, as it announced financial results for its second quarter of fiscal 2008, ended Sept. 28.

Excluding an $US87 million write-down of assets, revenue was $US1.44 billion for the quarter, up 13 percent from the year-ago period. Quarterly earnings were $0.29 per share. Analysts had been expecting earnings of $0.26 per share on $1.39 billion in revenue, according to estimates compiled by Thomson Financial.

During a conference call with analysts, Symantec Chairman and CEO, John Thompson, said the company's North American business had missed expectations and he offered cautious guidance for the next three months. "Our North America operating business experienced weak new business," he said. "This, coupled with the uncertain economic environment, caused us to take a more conservative view of the December quarter."

"New license sales for a number of the data center management products was a little bit weaker than our forecast," he added.

Symantec now expects revenue for the next quarter to fall in the range of $1.43 billion to $1.47 billion, with earnings per share between $0.25 and $0.30. Analysts' consensus had been $1.47 billion, with earnings of $0.31, according to Thomson Financial.

After-hours traders dumped Symantec stock on the lowered expectations. The company's stock was trading at $18.45 late Wednesday, down more than 12 per cent from Tuesday's close.

Symantec's consumer business got a boost from the introduction of the much-anticipated Norton 360 software, released in late February.

Consumer revenue totaled $434 million for the quarter, 61 per cent of this coming from the company's flagship Norton Internet Security suite. According to Thompson, 72 percent of consumer purchases are online now, as opposed to shrink-wrapped products.

The company's Windows-based backup products, which include Backup Exec, also posted strong results the company said in a [statement].

On the enterprise side, the company's security and data center management products, including the Veritas software, grew by 7 percent. These products now account for 58 percent of the company's revenue.

Symantec's much smaller services business -- totaling 6 per cent of revenue -- grew by 30 per cent.

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Robert McMillan

IDG News Service
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