Symantec Corporation (SYMC)

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Symantec Corp. (SYMC)

F2Q10 Earnings Call

October 28, 2009 5:00 pm ET


Helyn Corcos - VP IR

Enrique Salem - President and CEO

James Beer - CFO


John Difucci - J.P. Morgan

Kash Rangan - Merrill Lynch

Sarah Friar - Goldman Sachs

Phil Winslow - Credit Suisse

Todd Raker - Deutsche Bank Securities

Rob Owens - Pacific Crest Securities

Adam Holt - Morgan Stanley

Heather Bellini - ISI Group

Brad Zelnick - Macquarie Research Equities

Robert Breza - RBC Capital Markets

Katherine Egbert - Jefferies & Company

Aaron Schwartz - Ladenburg, Thalmann & Co.

Brian Freed - Morgan, Keegan & Company, Inc.

Daniel Ives - Friedman, Billings, Ramsey & Co.



Good day and welcome to Symantec's second quarter 2010 earnings conference call. Today's call is being recorded.

At this time, I would like to turn the call over to Helyn Corcos, Vice President of Investor Relations. Please go ahead.

Helyn Corcos

Good afternoon and thank you for joining our call to discuss fiscal second quarter 2010 financial results.

With me today are Enrique Salem, Symantec's President and CEO, and James Beer, Symantec's Executive Vice President and CFO. In a moment I will turn the call over to Enrique. He will discuss what is happening in the market and how Symantec executed during the quarter. Then James will provide highlights of our financial results as well as discuss our guidance assumptions as outlined in the press release. This will be followed by a question-and-answer session.

Today's call is being recorded and will be available for replay on Symantec's Investor Relations website at A copy of today's press release and supplemental financial information are available on our website, and a copy of today's prepared remarks will be available on the Investor Relations website shortly after the call is completed.

Some of the information discussed on this call, including our projections regarding revenue, operating results, deferred revenue, cash flow from operations, amortization of acquisition-related intangibles, share-based compensation, as well as products, features and delivery dates contain forward-looking statements, are preliminary and are subject to change. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. Additional information concerning these risks and uncertainties can be found in the company's most recent periodic reports filed with the U.S. Securities and Exchange Commission. Symantec assumes no obligation to update any forward-looking statements.

In addition to reporting financial results in accordance with generally accepted accounting principals or GAAP, Symantec reports non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found in the press release and on our website.

And now I would like to introduce you to our CEO, Enrique Salem.

Enrique Salem

Thank you, Helyn, and good afternoon, everyone.

I'm pleased with our second quarter results. We are encouraged by the signs we see of stabilization in the markets we serve. This gives us confidence that we will continue to see gradual improvement in our business over the next few quarters. Challenges remain, however, for some customers in the SMB segment and in certain regions around the world.

A focus on a clear set of priorities helped us deliver solid results in Q2. Of these, the first of these priorities is to strengthen our leadership in security, the second is to capitalize on the migration to next generation data protection, and the third is to help our customers commoditize infrastructure. The fourth is to deliver SaaS-based solutions to our customers. Our commitment to consistent execution underpins these priorities.

We started to see initial signs of progress in SMB security as we renewed our relationships with channel partners given the launch of our new security products. We also saw strength in the consumer segment as our business continues to benefit from our market-leading products.

One of the metrics that we use to track customer and partner loyalty is the Net Promoter Score. We've seen improving Net Promoter Scores across our business segments and geographies, and we believe that this is a positive leading indicator for our business going forward. This quarter our enterprise security business customers noted that we’ve simplified the installation and improved product performance. Additionally, our partners highlighted improvements in ease of doing business with Symantec. We continue to use the Net Promoter Score feedback to deliver differentiated and improved experiences for our customers and partners.

Now, let’s take a closer look at the highlights from the quarter:

The strength of our Consumer business was driven by strong Norton 360 sales and by our relationships with eight of the top nine OEMs. In mid-September, we launched our Norton Internet Security and Norton AntiVirus 2010 products, further distancing ourselves from the competition. These products leverage our new reputation-based security technology, code named Quorum, to deliver unmatched detection of new malware.

The 2010 Norton security products have already received top reviews from respected independent testing bodies including,, and Dennis Technology Labs. The Dennis report showed that Norton Internet Security 2010 was the only product tested that achieved a perfect 100% detection rate against increasingly prevalent zero-day threats due to our exclusive reputation-based security technology. In contrast, the report noted that the average detection rate across all products tested was 78%. Our 2009 products won over 150 awards, and we believe our new products will match or exceed that achievement.

We have many opportunities to grow our business through a variety of channels and around the world and are not dependant on any one partner or channel. During the quarter, we won consumer online backup deals with Toshiba and Acer. We now have backup relationships with four of the top five OEMs. We also extended our Norton Security Scan distribution agreement with Adobe Shockwave and added to our ISP partnerships with a win at EMOBILE, one of Japan’s largest mobile broadband service providers. We expanded our relationships with major French retailers and with Dixons, a major European-based retailer. We continue to focus on profitable partnerships across all channels and to enter into transactions that make economic sense for us given our leadership position.

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