Symantec VARs Renew Confidence After Q3 Report

Despite a precarious economic climate, VARs say that Symantec's increased third quarter earnings and optimistic projections for 2008 give them reason to also maintain a healthy, if not a cautious, optimism going into the March quarter.

"The year started out very well," said Sandy Cohn, general manger and director of technical services for Atec Group. "(Partners) are just taking a little longer to make their decision. But they're moving their business ahead without reservations."

The Cupertino-based company reported yesterday a rise in quarterly profits, a nine percent increase in shares and strong international sales. In addition, Symantec announced that its net income rose to $132 million in the December quarter of 2007, up 13 percent compared to $117 million third quarter last year.

Revenue also rose 15 percent to $1.52 billion, up from $1.33 billion in December 2006 and deferred revenue increased 12 percent, reaching $2.88 billion, from the $2.58 billion a year before.

In light of these trends, Symantec predicted that March quarter would end with revenue rising somewhere between $1.51 and $1.54 billion, with diluted earnings estimated between .33 and .35 per share.

Congruent with rising stocks, VARS reported a definite upswing in Symantec sales over the last six months. Dale Cunningham, director of consulting sales for Emtec, said that his company experienced strong sales during summer and into fall, which waned slightly during the holiday season at the end of November and December.

The positive uptick is a trend which partners say gives them reason to believe that the company's optimistic projections for 2008 could come to fruition. VARs added that product lines are solid, particularly the company's endpoint products, which have received positive response from their customer base.

"We're seeing more sales and we're seeing a higher profile from Symantec reps," said Cohn. "They have such a large product line, it's very difficult for these companies to tune these products so the sales go out the door. But they're finally getting that."

"It's taken them a while to get it together," he added.

During the third quarter earnings announcement, Symantec execs also lauded the success of several product lines, particularly that of Symantec Endpoint Protection 11, Back-up Exec System Recovery and Enterprise Vault, as well as the introduction of Norton 360 on the consumer side.

Symantec Chief Operating Officer Enrique Salem said that the company shipped 23 million seats during the December quarter, adding that the product has "already received some of the best evaluations and review from the industry."

The renewed enthusiasm VARs have for their partnership with the security giant comes in direct contrast with the less than rosy economic climate this time last year. One reason for the upswing could be, in part, due to reinvigorated confidence after a groundbreaking merger with storage giant Veritas in July 2005.

Following the acquisition, the Cupertino-based company suffered sinking stocks and significant internal restructuring, including a five percent reduction of its global workforce. Since then, VARs reported declining Symantec sales while struggling with long wait times, lack of support and problems that riddles its purchasing and licensing programs. Parters said that the problems persisted through 2006 and during the first six months of 2007.

"I think they went through some rough times. They seem to be coming out the other end, though," said Cunningham.

Now, however, partners say that it seems that the company seems to have finally overcome the worst of its post-merger growing pains and have finally begun to assimilate their security and storage components into one unified entity.

"They're finally working as one company and that's what helps," said Cohn. "(Veritas employees) are Symantec people now. They finally got their Symantec people cross-trained to work with people in (storage)."

Cohn said that Symantec seemed to show a renewed interest in the mid-tier market, which would serve to expand opportunities for his own company. "I think it's going to pay off for them," he said.

Yet despite Symantec's rejuvenated momentum, VARs say that whether company stocks will remain true to predictions and continuing their upward trend will remain to be seen.

"Can it swim against the market tide?" said Cunningham. "To some degree yes, but no company can totally swim against the tide."