) is scheduled to announce its second quarter fiscal 2013 results
on October 24, 2012, and we notice slight variation in the
First Quarter Recap
Symantec reported earnings per share of 39 cents in the first
quarter of 2013, comfortably ahead of the Zacks Consensus
Estimate of 33 cents.
Symantec reported revenues of $1.67 billion in the quarter, up
0.9% year over year from $1.65 billion. The company's investment
in cloud security and mobility is slowly paying off, and this is
helping the company to gain market share globally.
Gross margin in the quarter was 82.97%, down 136 basis points
(bps) from 84.33% in the year-ago period. The decline in gross
margin was due to higher costs associated with the company's
businesses, and the company expects this trend to continue going
Operating margin was 16.1%, down 220 bps from 18.3% in the
year-ago quarter. Operating margin declined as a result of higher
operating expense, arising from a substantial increase in
research & development and general & administrative
The company expects second quarter GAAP revenue to be in the
range of $1.635 billion to $1.665 billion for fiscal 2013,
reflecting a year-over-year decline of 1.0%-3.0%.
Agreement of Analysts
Of the 13 analysts providing estimates for the second quarter,
one revised estimate upward and another one revised estimate
downward in the last 30 days. Similar movements were noticed for
2013, while one analyst revised the estimate upward in the last
30 days for fiscal 2014.
Some analysts are of the opinion that the company should have
a more focused approach toward the Consumer segment. They expect
it to remain a growth oriented business and cannot foresee
divestiture in the near future. Analysts expect this segment to
be an area of focus and it is also believed that the company will
adopt more aggressive routesto diversify from a PC-centric
antivirus business. This in a way will also help to improve the
Some analysts believe that currency will have a measurable
impact on third quarter bookings and might also impact the fourth
quarter guidance. Analysts are apprehensive about whether
stronger demand can offset downward currency movement, which
could delay the company's growth acceleration or margin expansion
Magnitude of Estimate Revisions
Over the past 30 days, Zacks Consensus Estimate for the second
quarter dropped a penny. However, over the last 90 days, the
estimate moved down by 3 cents to 33 cents. Again, for the
December quarter estimates went down one penny over the last 30
days, while it has reduced by 2 cents to 37 cents over the last
90 days For fiscal 2013, estimates have remained unchanged over
the last 30 days, while the same has moved down by 2 cents to
$1.46 in the last 90 days.
Symantec delivered modest first quarter results with EPS
surpassing the Zacks Consensus Estimate and revenue improving on
a yearly basis. The company also witnessed a mixed geographical
revenue performance. The company has enough cash in hand and
repurchased shares during the quarter.
Uncertainty over PC sales is going to affect its Consumer
segment throughout the year. So analysts advise more focused
approach in this segment. They expect the Consumer segment to
remain a key asset and cannot foresee divestiture in the near
future. Moreover, the company is taking aggressive measures to
grow its PC-centric antivirus business.
On the other hand, competition is intensifying as smaller
companies like Kaspersky are coming up with better products at
regular intervals. Stiff competition from McAfee - acquired by
could fuel competition in the Mobile security software space.
Also, the prevailing economic turmoil in Europe may have a
negative impact on the business of that region. Currency
fluctuation may limit margin expansion for the time being.
However, the company remains the leader in the IT security
industry and is competitively priced.
The company has a Zacks #3 Rank, implying a short-term Hold
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