Published on March 9th, 2015 | by Daily Station Team
Corporate breakup causing mixed results of Symantec (NASDAQ:SYMC)’s third quarter
The California based software leader, Symantec (NASDAQ:SYMC) reported grey results in its last quarter earnings. Reasons range from the revenue growth of its Information Management Segment to the decline by exiting OEM contracts. As if this wasn’t enough, Symantec (NASDAQ:SYMC) was on a roller coaster ride with the drop of various significant currencies compared to the U.S. dollar. It reported $1.64 billion in revenues which was lower than the $1.67 billion consensus estimate.
Symantec (NASDAQ:SYMC) was in the saddle with its Information Management Segment being the only segment this quarter which achieved revenue growth on a yearly basis and makes up 40% of the company’s revenues. This quarter it achieved a substantial 1% growth as both Consumer Security and Enterprise Security revenues dropped 11% and 4% respectively.
However the company’s growth, in respect to a constant currency, was due to the increase of double digit profits by NetBackup software. Speaking of this software, it has come to attention that the Information Management segment is soon to be pushed away from Symantec (NASDAQ:SYMC) into another publicly traded firm, and will go about as “Veritas Technology Corporation”. This change is reported to take place sometime in October 2015.
On the other hand, the tech leader sure has explaining to do regarding its Consumer Security Segment which makes up around 30% of its revenues. Through exiting the OEM contracts, Symantec (NASDAQ:SYMC) has caused a decrease in revenues with high margins. This segment encountered major attacks; first with its business slowing down by 11% and secondly by a whole 4% point collision through a currency impact.
Speaking of currency basis, Symantec’s (NASDAQ:SYMC) Enterprise Security Segment remained flat on it yet its revenues dropped by 4% making it to $509 million. This decline was mostly due to the demand of the company’s new products, Endpoint Protection and Data Loss Prevention. To make matters worse, its GAAP margins dropped by 3% on a yearly basis to 17%.
Symantec (NASDAQ:SYMC) stood at the back of the line as competitors realized the cyber security shift that took on the market. Now, the tech leader has advanced to take the appropriate measures of detection and respond instead of the usual “prevention”. In order to carry out this approach, the company has introduced new models which it hopes will improve its overall position.
The company’s savings were of no use in the face of cash flows which although increased by 9% yet faced a huge cash outflow of $100 million through restructuring costs. The company expects its operating cash flow to drop in the 2015 fiscal year, considering the restructuring costs of its corporate separation.
Symantec (NASDAQ:SYMC) was knee length deep in problems when time came to buy back shares. Its share repurchases cost $125 million each quarter but this time it still had $283 million left to carry out considering its buyback policy. In order to tackle this, the company had to launch another $1 billion shares in its repurchase program.