Symantec's Q2: Steady Growth, Cautious Outlook

"In the face of a slowing economic environment, our company generated year-over-year growth in revenue, demonstrated solid progress in our operating margins goals and delivered strong earnings growth. Our core businesses -- consumer security, backup and storage -- continued to grow and drive profitability for our company," said Symantec CEO John Thompson, during a conference call reporting the company's earning for second quarter, which ended Oct. 3.

"While we are pleased overall with the results, like many other companies, we saw a pause in IT spending among some of our customers during the last week of the quarter due to what we suspect were uncertainties and constraints in the global markets."

The company's conservative outlook represents a distinct contrast to the company's current second quarter reported earnings, which have remained steady throughout the second quarter. Altogether, the Cupertino-based company's revenue held steady at $1.52 billion, up from $1.42 billion in the same period last year.

And net income at $140 million represented a significant increase, up from $50 million in the second quarter the previous fiscal year. Diluted earnings per share rose to $0.16, up from $0.06 per share last year.

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Thompson said that Symantec's strong earnings illustrated the company's ability to weather the impending economic storm.

"We generate strong cash flow from operations, in part, as a result of our predictable maintenance streams, and have reduced net capital expenditures during the last two years," said Thompson. "As a result, I believe we are well positioned to deal with the current macroeconomic environment."

However, company executives said that they continue to see a decline in spending on the consumer side, and anticipate a slower than average December quarter in retail sectors.

"I don't think this is the time for us to be cavalier about our guidance," said Thompson. "December historically has been the strongest sequential growth for us, with the largest amount of business. But we cannot ignore the fact that many of our customers have suffered, and as such, that could have some impact on us."

Enrique Salem, Symantec chief operating officer, said that of all the company's segments "retail has been the weak spot," experiencing about a 20 percent decline from second quarter last year.

"It's pretty clear that retail has continued to soften," said Salem.

Also following trends of slowing growth was Symantec's security and compliance segment, which experienced just one percent growth from second quarter of the previous year, and accounted for 26 percent of total revenue at $403 million.

Yet even as retail sales continue to fall, executives said that many of the company's product lines remained solid with strong growth, despite a weakening economy.

Symantec executives lauded the continued strength of the company's numerous storage and DLP offerings during the past quarter, with recently announced launches that included Veritas Cluster Server One, a new disaster recovery platform for virtualized data centers, as well as Backup Exec 12.5, Control Compliance Suite 9.0, Enterprise Vault 8.0 and Symantec Data Loss Prevention 9.0.

Altogether, storage and server management growth was up 12 percent year over year, and generated $573 million, constituting 38 percent of total revenue.