Symantec Issues Warning, Blames Weak Spending
CUPERTINO, Calif. – Internet security company Symantec Corp. on Thursday warned that first-quarter sales would fall short of expectations due to weak spending on its software by computer users across the United States, Europe and Japan.
The Cupertino, California-based company said its first- quarter earnings would come in below both its prior forecast and the expectations of Wall Street analysts by 30 percent or more because of the global slowdown.
The warning touched off a sharp decline in Symantec shares, which tumbled to $45.05 on Instinet, down from $61.31 at the Nasdaq close, a decline of about 27 percent.
Under the lower guidance, Symantec forecast first-quarter earnings would range between 39 cents and 47 cents per share on projected sales of $225 million to $235 million.
The company had previously told Wall Street it would earn 62 cents to 67 cents a share on revenue of $255 million to $263 million in the quarter ending June 29.
Analysts had been looking for earnings in a similar range, with an average forecast for 65 cents in the quarter, according to Thomson Financial/First Call, which tracks consensus earnings estimates.
``All the products in the consumer space are off and we think this relates to weak economies around the world, not just in the U.S.,'' Symantec CEO John W. Thompson told Reuters. ``Our business is still quite profitable so this does not necessarily reflect a retrenching of our strategy.''
Symantec, a leader in the anti-virus market, has been pushing into the enterprise market, where demand continues to rise for products that protect corporate data.
Despite the lower projected revenues, Symantec's products are still holding market share and the enterprise security offerings have seen strong orders, the company said.
Consumer sales represent one-third of Symantec's total sales, according to Mary O'Rourke, an analyst at A.G. Edwards.
``The consumer side of the business has a history of being volatile,'' she said. ``It's difficult to predict and that's why they've been trying to move away from the consumer market.''
Even after the lowered expectations, Symantec looks attractively valued, O'Rourke said.
``At this point, I think the thing to remember is there's a strong pull back on Symantec's price. It's an interesting time to jump in,'' she said. ``Even if they did miss, we feel their valuation was cheap enough that it's a good buying opportunity. It wasn't a hyped-up stock, by any means, so they can handle this.''
Symantec also said it expects revenue for the September quarter to be flat in comparison with the June quarter.
Fiscal 2002 revenue is expected to grow in the mid- to high-teens from $944.6 million in fiscal year 2001. Symantec will release actual results for the fiscal first quarter after the market closes on July 18.