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$750M Expected Sale Of NortonLifeLock Buildings Delayed

‘We’ve had multiple offers for each one of those buildings, and then through the outbreak, those discussions slowed down ... Our expectation is that it will take a little bit more time,’ says NortonLifeLock CEO Vincent Pilette.

NortonLifeLock has delayed the sale of several vacant office buildings for roughly $750 million due to the coronavirus pandemic.

The Tempe, Ariz.-based consumer cybersecurity vendor had received multiple offers for each of the underutilized buildings it’s owned prior to the COVID-19 outbreak, said NortonLifeLock CEO Vincent Pilette. But those contract negotiations have slowed down as some potential buyers drop their offers while others proposed alternates like a short-term lease as they figure out their new needs, he said.

“We’ve had multiple offers for each one of those buildings, and then through the outbreak, those discussions slowed down,” Pilette told investors Thursday. “Our expectation is that it will take a little bit more time.”

[Related: Deal Between Rivals McAfee, NortonLifeLock Under Consideration: Report]

The company had 12,000 employees in August 2019 at the time it announced the $10.7 billion sale of its Symantec Enterprise Security business to Broadcom, Pilette told investors at the time, but expected to operate its NortonLifeLock consumer organization with just 2,500 employees following aggressive cost-cutting measures.

As a result of steep headcount reductions and the relocation of its headquarters from Mountain View, Calif. to Tempe, Ariz., Pilette told investors in November that NortonLifeLock was able to put four or five corporate campuses up for sale.

On Thursday, Pilette told investors that NortonLifeLock has brought in roughly $750 million from the January 2020 sale of ID Analytics to LexisNexis Risk Solutions as well as the October 2017 unloading of Symantec Website Security to DigiCert. The other $750 million of NortonLifeLock’s anticipated proceeds is from the sale of underutilized buildings, according to Pilette.

NortonLifeLock is not relying on cash from the sale of the vacant buildings for running its day-to-day business, according to Interim Chief Financial Officer Matthew Brown. And the slowdown in the sales process will not impact NortonLifeLock’s ability to hit its projected operating margin once the removal of stranded costs following the Symantec sale finishes up in August, Brown said.

“We believe that it’s a temporary delay and remain confident we will be able to move forward with the sales in a reasonable timeframe,” Brown told investors Thursday.

Revenue for NortonLifeLock in the quarter ended April 3 dipped to $614 million, down 0.5 percent from $617 million the year prior. That beat Seeking Alpha’s estimate of $601.3 million.

Net income skyrocketed to $231 million, or $0.36 per diluted share, up 779.4 percent from $34 million, or $0.05 per diluted share, last year. On a non-GAAP basis, net income soared to $167 million, or $0.26 per diluted share, up 53 percent from $109 million, or $0.16 per diluted share, a year earlier. That crushed Seeking Alpha’s earnings estimate of $0.16 per diluted share.

NortonLifeLock’s stock climbed $0.82 (3.92 percent) to $21.75 in after-hours trading Thursday. That’s the highest the company’s stock has traded since Jan. 31.

On a full-year basis, sales inched ahead to $2.49 billion, up 1.4 percent from $2.46 billion a year earlier. Net income for the fiscal year ended April 3, 2020 skyrocketed to $3.89 billion, or $6.05 per diluted share, up 1,253.8 percent from $31 million in the fiscal year ended March 29, 2019. Broadcom bought the Symantec enterprise security business for $10.7 billion during the most recent fiscal year.

In the coming quarter, NortonLifeLock expects to achieve non-GAAP earnings of $0.18 to $0.22 per share on revenue in the range of $590 million to $605 million. Seeking Alpha had been projecting earnings of $0.20 per share on sales of $615.5 million.

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