Symantec: Look at our Q4 numbers ... no, not those ones

Security fails, storage grows

The road to separation continues to be anything but smooth for Symantec’s security operation, particularly on the consumer front, as it again suffered from sales shrinkage, unlike the breakaway storage biz.

In the last set of full year numbers from the firm, sales fell three per cent to $6.5bn, including a four per cent slip in content, subscription and maintenance to $5.749bn, and a six per cent spike in license to $759m.

This translated into a three per cent drop in operating profit to $1.148bn and a net profit of $878m, down two per cent.

The business will become two separately traded organs from the start of next year, Symantec and Veritas, in the hope growth can be rediscovered and that the share price will reflect this.

But in the two full quarters since the split was announced, Symantec’s results have unsurprisingly — given the upheaval — deteriorated.

For the fourth quarter of fiscal 2015 ended 2 January, sales slipped seven per cent as reported to $1.51bn and were flat in constant currency; content, subscription and maintenance revenues were down eight per cent to $1.318bn, and licence was up four per cent to $200m.

Consumer security dropped 19 per cent to $408m, and this was something the company clearly did not want to highlight on a conference call with analysts — it avoided the topic where possible.

Enterprise security was down four per cent to $491m — double digit growth in data loss protection software was more than offset “weakness” in Endpoint Management, the company said.

Information Management (Vertias) was up one per cent to $619m. NetBackup appliances and software were the growth drivers but Backup Exec and Storage Management were the weak spots.

In constant currency, consumer and enterprise security fell 13 per cent and grew two per cent respectively, while information management grew nine per cent during the quarter.

Contained in the expenses, the company incurred restructuring costs of $61m and separation costs of $43m.

The total cost of revenues was up two per cent to $287m, leaving gross profit at $1.23bn. Operating expenses went up four per cent to $1.08bn including restructuring costs of $61m and separation costs of $43m.

Operating profit was $152m, down 50 per cent year-on-year, but a tax benefit of $33m pushed up net income to $176m, though this still represented a drop of 18 per cent.

This was all despite Symantec confirming it pulled out all the stops to up its game – the renewal team exceeded its target; and the licensing compliance police “accelerated” audit activity.

Thomas Seifert, CFO, said the company is on track to split by 2 January 2016 ... and for the management team this can’t come soon enough. ®

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