Symantec Suffers Security Revenue Declines During Restructuring
Symantec executives on Thursday told Wall Street that revenue from its Norton consumer and its enterprise security businesses declined in its fiscal third quarter, citing a number of reasons, including the company’s ongoing restructuring into two separate public companies.
The Mountain View, Calif.-based company reported a profit of $222 million, or 32 cents a share, down from $283 million, or 40 cents a share, a year earlier. Despite the revenue declines, the company said its fiscal third-quarter earnings, adjusted for restructuring costs and stock option expenses, were 53 cents per share, beating Wall Street expectations.
Symantec said revenue from its Norton antivirus offerings declined 11 percent year-over-year to $461 million from $517 million a year earlier. Symantec executives said the Norton line was disrupted during its decision to pull out of unprofitable OEM and retail channel arrangements.
[Related: Symantec Split To Cost Up To $220M, Layoffs Ahead]
Enterprise security revenue also fell, declining 4 percent to $509 million from $528 million a year earlier. Sales of Symantec endpoint management, and mail and web security, contributed to the decline, the company said. Revenue from Symantec’s endpoint protection and data loss prevention products grew 5 percent and 2 percent, respectively, during its fiscal third quarter.
Symantec’s information management business, which includes its storage and backup and recovery software, grew slightly to $668 million from $660 million. Revenue from content, subscription and maintenance declined 6 percent to $1.41 billion. License revenue increased 15 percent to $226 million.
Symantec announced in October that it would spin off its data management business, which consists of its backup and recovery software, naming the new company Veritas Technologies Corp. The spin-off is expected to be completed at the end of 2015.
Costs associated with restructuring and separating into an information management and security businesses totaled $68 million during the December quarter, said Thomas Seifert, Symantec’s chief financial officer. "As we noted last quarter, we are reducing our workforce and taking steps to improve our cost structure as we prepare for the separation,’ Seifert said in prepared remarks. Symantec eliminated its chief operating officer position in November, forcing Stephen Gillett to step down from the position.
Symantec executives remain upbeat that the company’s strategy to roll out threat intelligence services and advanced threat detection capabilities will be a big opportunity for the channel. Last month, the company acquired the Narus security unit from Boeing, adding the company’s security engineers and data scientists behind the business to its portfolio. The company plans to leverage data from its global endpoint protection install base to provide threat intelligence information.
Symantec partners that specialize in either the data management or security products of the company’s portfolio remain confident that the separation will benefit them.
Symantec executives know where the market is moving and over time will modernize its security portfolio and fill in any gaps with acquisitions, said Dermot Williams, CEO of U.K.-based solution provider Threatscape, one of Symantec’s top global security partners. Managed services is a strong growth area, and Symantec’s endpoint protection, data center security and Altiris IT management platform are a favorite with some customers.
’We think that Symantec will be a better organization for us once its focus is strictly security,’ Williams said. ’We would only have to deal with people who care as deeply as we do with the security portfolio."
PUBLISHED FEB. 5, 2015