Symantec shares sink on weak 1Q forecast
Symantec beats expectations in 4Q but shares sink on weak revenue forecast
Symantec Corp.'s shares fell Wednesday after the computer security company issued a weak revenue forecast for its fiscal first quarter.
THE SPARK: Symantec said late Tuesday that restructuring costs, impairment charges and other special items weighed on its fourth-quarter performance but its results beat expectations on an adjusted basis.
Its net income fell 66 percent to $188 million, or 26 cents per share, for the period from $559 million, or 76 cents per share, in the fourth quarter last year. It earned 44 cents per share excluding one-time items, up from 38 cents per share last year. Revenue increased 4 percent to $1.75 billion.
Analysts were anticipating earnings of 38 cents per share on revenue of $1.73 billion.
However, the company said on a conference call that it expects its revenue for the current quarter to come in between $1.61 billion and $1.65 billion due to pressure from the weak yen. Analysts were anticipating revenue of $1.67 billion.
THE BIG PICTURE: Symantec recently launched a reorganization that included cutting executive and middle-management jobs to make the company more nimble and able to adapt to customer needs. The company said that this streamlining, as well as a reallocation of its resources to focus on its most promising products, should deliver improved performance this fiscal year.
THE ANALYSIS: While shares fell, Cowen & Co. analyst Gregg Moskowitz reiterated his "Outperform" rating on the company's shares, saying that concerns about the first-quarter forecast are overdone.
The analyst said he recognizes the near-term transition from the restructuring, and the substantial yen depreciation but said he believes the outlook may be somewhat conservative. And more importantly, he remains confident in the company's longer-term prospects.
SHARE ACTION: Shares fell 82 cents, more than 3 percent, to $24.28 by midmorning. The stock, however, has been climbing all year, so the drop still left Symantec at the upper end of its 52-week trading range of $13.06 to $25.
