Symantec Stresses Enterprise Success in 4Q

For its fourth quarter ended April 1, the security giant recorded revenue of $713 million, up 28 percent from the year-earlier period. Fourth-quarter GAAP net income was $120 million, compared with $117 million for the same quarter last year.

For its 2005 fiscal year, Symantec posted a 38 percent increase in revenue to $2.6 billion. GAAP net income for the year was $536 million, up from $371 million from the previous year.

Symantec, Cupertino, Calif., said net income for the quarter includes a one-time tax expense of $54 million related to repatriation of $625 million in cash; $500 million of that amount was subject to the American Jobs Creation Act of 2004.

The just-reported quarter could be the last recorded by Symantec before its pending merger with Veritas Software. On an earnings call Wednesday afternoon with financial analysts, Symantec CEO and Chairman John Thompson said the two companies are still working with the Securities and Exchange Commission to finalize the joint merger proxy, a process that has taken much longer than expected. Still, Thompson said he hasn't given up on the idea of closing the merger during the quarter ending in June.

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Thompson underscored his company's enterprise momentum, which showed substantial year-over-year growth. Symantec signed 401 contracts worldwide during the fourth quarter that exceeded $100,000 in value. Thompson said 22 of those deals were worth more than $1 million, and 60 percent included multiple Symantec enterprise products.

Overall, the enterprise product line contributed 49 percent of revenue for the quarter, which represented a 22 percent jump over the year-earlier period, said Symantec CFO Greg Myers. Within that portfolio, enterprise security grew 23 percent, representing 36 percent of the company's revenue for the quarter. The enterprise administration business, which includes Symantec LiveState line, grew 14 percent of the quarter, representing 11 percent of total quarterly revenue.

Thompson said enterprise products that had particularly noteworthy momentum in the quarter included Symantec Enterprise Security Manager, which is one of the company's compliance-related offerings, and LiveState Recovery. "This idea of helping customers deal with this issue of infrastructure resiliency is real," he said.

Although Symantec's burgeoning services business only represented 2 percent of revenue for the quarter, its contribution grew by 60 percent year over year, propelled by consulting revenue and managed services for intrusion prevention devices, he added.

"We think services will be an important part of overall solutions portfolio," Thompson said. "You should expect to see continue to invest in the services business."

Symantec's fourth-quarter consumer business grew 34 percent. The portion of this revenue that can be attributed to electronic software distribution grew 79 percent during the fiscal year, Myers said.

On a regional basis, the Americas contributed 54 percent of the company's overall mix, up 31 percent.

Symantec had $1.33 billion in deferred revenue for the fourth quarter and ended the 2005 fiscal year with $3.2 billion in cash and short-term investments, Myers said.

Looking forward, Myers provided guidance for the first fiscal quarter ending July 1. He said Symantec anticipates revenue between $700 million and $720 million, with GAAP earnings per share projected for 23 cents per share, if the company hits the midpoint of that revenue guidance.

This guidance excludes any potential impact from the Veritas merger, but it does include seasonal factors, Myers said. He opted not to provide guidance for the full 2006 fiscal year until after the pending merger is complete.