Symantec Corporation (SYMC) reported earnings per share ("EPS") of 38 cents
in the fourth quarter of 2013, comfortably beating of the Zacks
Consensus Estimate of 33 cents. The EPS was much lower than the
year - ago quarter, as the company has gained
$526.0 million from the sale of asset in the previous year.
Symantec reported revenues of $1.75 billion in the quarter, up
4.0% year over year from $1.68 billion. The revenue growth was
supported by strength in License revenues, which improved
substantially backed by License renewal.
Revenues from the Consumer segment moved up by 1.0% year over
year and represented 30.3% of the total revenue. Security and
Compliance segment (around 29.3% of the total revenue) increased
2.0% on a year-over-year basis. Storage and Server Management
segment represented around 36.3% of the total revenue and reported
year-over-year growth of 7.0%. Lastly, the Services segment
represented 4.1% of the total revenue and grew approximately 9.0%
on a year-over-year basis.
The company generated around 51.3% of the total revenue from the
International market, up 2.0% from the year-ago quarter. Moreover,
The Americas, which include the United States, Latin America and
Canada, represented around 54.7% of the total revenue, and
witnessed year-over-year growth of 6.0%. The Europe, Middle East
and Africa region (27.6% of revenues) grew by 6.0% on a
year-over-year basis. Asia-Pacific/Japan revenues (contributing
around 17.6% of the total revenue) registered a decline of 4.0% on
a year-over-year basis.
Gross margin in the quarter was 82.4%, down 50 basis points
(bps) from 82.9% in the year-ago period. Gross margin declined as
cost of revenues increased at a higher rate than revenues.
Operating margin was 14.4%, up 270 bps from 11.7% in the
year-ago quarter. Operating margin grew as a result of lower
operating expense, arising from a decrease in selling and marketing
expenses and flat general & administrative expenses.
Net income attributed to Symantec in the reported quarter was
$188.0 million or 26 cents per share compared with $559.0 million
or 76 cents per share in the year-ago period.
Excluding special items like operating expense adjustment,
non-cash interest expense and related tax adjustments but including
stock-based compensation expenses, adjusted net income in the
quarter was 38 cents per share compared with 36 cents per share in
the year-ago period.
Balance Sheet & Cash Flow
Symantec registered cash, cash equivalents and short-term
investments of $4.75 billion, up from $4.25 billion in the previous
quarter. Long-term debt for the company remained unchanged at $2.09
billion. Cash flow from operating activities was $1.59 billion.
During the quarter, Symantec repurchased 49 million shares for
an amount of $826.0 million at an average share price of $16.98 per
share. The company has initiated a cash dividend payment of 15
cents per share.
For the first quarter of 2014, we expect GAAP revenues in the
range of $1.61 billion to $1.65 billion, down from $1.67 billion in
the year-ago period. Symantec expects GAAP operating margin in the
range of 8.6% to 8.7%, down from 16.1% in the year-ago period.
Whereas, non-GAAP operating margin is expected in the range of
22.6% to 22.7%, down from 26.1% in the year ago period.
Symantec expects earnings per share on a GAAP basis between 11
and 12 cents per share as compared with 24 cents in the year-ago
period. Whereas, non-GAAP earnings-per-share are estimated in the
range of 35 to 36 cents as compared with 43 cents in the year-ago
Symantec has delivered decent fourth-quarter 2013 results, with
EPS surpassing the Zacks Consensus Estimates and revenues
increasing from the previous quarter. Symantec expects a
sequentially weak EPS in the next quarter, which seems justified
given its plans for additional investments in some operating
Moreover, the operating performance of the company was good, but
the uncertainty over PC sales is going to affect its Consumer
segment throughout the year. Moreover, as smaller companies like
Kaspersky are consistently bringing comparable
products to the market, competition continues to intensify.
Reduction in tech spending, stiff competition from
McAfee -- acquired by Intel Corp. (INTC), as well as the prevailing economic turmoil in
Europe may have some dampening effect on Symantec's business
Symantec has a Zacks Rank #2 (Hold).
Other Stocks to Consider
Other stocks in the technology industry that are currently
performing well are Aspen Tech Inc. ( AZPN ), and
Progress Software ( PRGS ) with a Zacks
Rank #1 (Strong Buy).ASPEN TECH INC (AZPN): Free Stock Analysis
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ReportSYMANTEC CORP (SYMC): Free Stock Analysis
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