Symantec Corporation (SYMC)

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Symantec (SYMC)

Q2 2013 Earnings Call

October 24, 2012 5:00 pm ET


Helyn Corcos - Vice President of Investors Relations

Stephen M. Bennett - Chairman, Chief Executive Officer and President

James A. Beer - Chief Financial Officer and Executive Vice President


Brent Thill - UBS Investment Bank, Research Division

Brad A. Zelnick - Macquarie Research

Walter H. Pritchard - Citigroup Inc, Research Division

Aaron Schwartz - Jefferies & Company, Inc., Research Division

Keith Weiss - Morgan Stanley, Research Division

Gregory Dunham - Goldman Sachs Group Inc., Research Division

Sitikantha Panigrahi - Crédit Suisse AG, Research Division

Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division

John S. DiFucci - JP Morgan Chase & Co, Research Division

Robert P. Breza - RBC Capital Markets, LLC, Research Division

Chaitanya Yaramada - Robert W. Baird & Co. Incorporated, Research Division

James Wesman

Richard T. Williams - Cross Research LLC

Shaul Eyal - Oppenheimer & Co. Inc., Research Division



Good day, and welcome to Symantec's Second Quarter 2013 Earnings Conference. Today's call is being recorded. At this time, I'd like to turn the call over to Ms. Helyn Corcos, Vice President of Investor Relations. Please go ahead.

Helyn Corcos

Good afternoon, and thank you for joining our call to discuss our second quarter results for fiscal 2013. With me today are Steve Bennett, Symantec's Chairman, President and CEO; and James Beer, Symantec's Executive Vice President and CFO. In a moment, I will turn the call over to Steve. He will make a few opening remarks, then James will provide quarterly highlights and review our financial results, as well as discuss our guidance and assumptions. 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. A copy of today's press release and supplemental financial information are posted on our website as well. Today's prepared remarks will be posted on the IR site after the call is completed.

Before we begin, I'd like to remind you that we provide year-over-year constant currency growth rates in our prepared remarks unless otherwise stated. Earnings per share growth rates are provided on an as-reported basis. We use foreign currency rules of thumb in our guidance section for all constant currency year-over-year growth rates.

For the September 2012 quarter, the actual weighted average exchange rate was $1.25 per euro and the end-of-period rate was $1.29 per euro, compared to our guided rate of $1.23 per euro. These compared to the September 2011 quarter, where the actual weighted average rate was $1.41 per euro and the end-of-period rate was $1.34 per euro. We've included a summary of actual and currency-adjusted growth rates in our press release tables and in our supplemental information which are available on the IR website.

Some of the information discussed on this call, including our projections regarding revenue, operating results, deferred revenue, amortization of acquisition-related intangibles and stock-based compensation for the coming quarter contain forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these 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 Principles 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 the IR website.

And now I'll turn it over to our CEO, Mr. Steve Bennett.

Stephen M. Bennett

Thank you, Helyn, and good afternoon, everyone. When a company announces an unplanned CEO change, you never know what to expect because of all the uncertainty that's created. Thanks to the focus and dedication of all Symantec employees, I'm pleased to report that the team stepped up during this transition. While working on our plan to change and improve the company for our customers, employees, partners and shareholders, we executed well in the second quarter, delivering better-than-expected financial results. While the team focused on delivering in the current quarter, we are also working on creating value over a longer term time horizon.

Starting with a clean sheet of paper, the team is hard at work developing a strategy and operational plan that will help us deliver even more value for our customers and partners. So we win in the market and improve our financial performance. Our goal is to deliver a strategy and plan that will consistently deliver greater than 5% organic growth and 30% operating margins within the next 2 to 3 years. At this point, we believe we will reach sustained greater than 30% operating margins faster than 5% sustained organic growth. This plan will be one that both the leadership team and the board believe we can deliver against in the short and long term.

In the meantime, we are also -- we also continue to evaluate all of our strategic alternatives to create shareholder value and believe we are on track to share our new strategic direction and operational plan in late January of 2013. We are moving to quickly change so we can continue to improve our performance on a global basis. With more than 50% of our revenue coming from outside the U.S., we can no longer operate like a U.S.-based company with global distribution.

As you can see from our recent history, our growth rates are higher outside the U.S. Our head of worldwide sales will be leaving the company. To better position us to win globally, we've decided to elevate the geo leadership roles and have them report directly to me. This move expands the scope of our regional leaders, making them ambassadors and general managers of their geographies. While their primary focus will be sales in their geographies, they will also play an expanded Symantec leadership role. We believe this will allow us to accelerate our pace of change and make better and faster decisions so we perform at a higher level on both a global and local basis.

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