Symantec Launches Probe Around Concerns Raised By Ex-Employee, Company's Stock Plummets


Platform security behemoth Symantec has retained independent council and other advisors to help investigate concerns raised by a former employee, the company said Thursday.

The Mountain View, Calif.-based company said the probe by the Audit Committee of its Board of Directors is in its early stages. The investigation is not tied to any security concern or breach around Symantec's products or systems, Cynthia Hiponia, vice president of investor relations, said during the company's earnings call Thursday.

Symantec's stock plunged $6.08 (20.84%) to $23.10 in after-hours trading, marking the lowest trading price for the company's stock since October 2016. The company took the highly-unusual step of not allowing financial analysts to ask any questions during the earnings call and limited the session to prepared remarks (on unrelated topics) from CEO Greg Clark and CFO Nick Noviello.

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Symantec said its financial results and guidance may be subject to change based on the outcome of the Audit Committee probe. Although the company said it cannot predict the duration or outcome of the investigation, Symantec said it's unlikely that the probe will be completed in time for the company to file its annual 10-K report for the fiscal year ended March 30, 2018, in a timely manner.

Symantec voluntary contacted the U.S. Securities and Exchange Commission (SEC) to notify it that an internal investigation is underway, and said its Audit Committee intends to provide additional information to the SEC as the probe progresses. Since the investigation is an ongoing matter, Hiponia said the company would be unable to comment further during Thursday's earnings call.

Sales in the fourth fiscal quarter ended March 30 jumped to $1.22 billion, up 9.6 percent from $1.12 billion a year ago. On a non-GAAP basis, revenue increased to $1.23 billion, up 4.9 percent from $1.18 billion last year. That edged out Seeking Alpha's projection of $1.19 billion.

The company reported a net loss of $35 million, or $0.06 per diluted share, improved from the $143 million loss, or $0.23 per diluted share, the year before. On a non-GAAP basis, net income skyrocketed to $310 million, or $0.46 per diluted share, up 68.5 percent from $184 million, or $0.28 per diluted share, last year. That beat Seeking Alpha's earnings estimate of $0.39 per share.

For all of fiscal 2018, Symantec's revenue climbed to $4.85 billion, up 20.6 percent from $4.02 billion in fiscal 2017. The company recorded net income of $1.16 billion, or $1.74 per diluted share, up from a net loss of $106 million, or $0.17 per diluted share, last year.

Enterprise security sales tumbled to $609 million, down 7.2 percent from $656 million the year prior as an acceleration in the adoption of cloud and subscription-based products by enterprise customers led to lower in-period revenue recognition.

Consumer digital safety revenue, though, leapfrogged to $613 million, up 33.6 percent from $459 million last year as customers move beyond device security and focus on protecting the entire lifecycle, according to Symantec.

For the coming quarter, Symantec expects non-GAAP earnings of $0.31 to $0.35 per diluted share on adjusted sales of $1.135 billion to $1.165 billion. That came in below Seeking Alpha's projection of non-GAAP earnings of $0.41 per share on adjusted sales of $1.18 billion.

Consumer digital safety revenue is expected to come in at between $600 million and $610 million, representing year-over-year organic growth after factoring out changes in foreign currency exchange rates.

And enterprise security revenue is projected to land between $535 million and $555 million, representing a year-over-year decline due to a lower mix of business yielding in-period revenue, increased contract duration, and the timing of maintenance renewals.