Technology

How Silver Lake Saved Symantec Earnings

Chris Lange

Published: February 5, 2016 9:40 am

Last Updated: January 13, 2020 1:35 pm

Symantec Corp. (NASDAQ: SYMC) reported its fiscal third-quarter financial results after the markets closed on Thursday, as well as a huge investment by Silver Lake. The company had $0.26 in earnings per share (EPS) on $909 million in revenue, compared to consensus estimates of $0.32 in EPS on revenue of $905 million. In the same period from the previous year, Symantec posted ESP of $0.33 and $970 million in revenue.

Even though earnings were not up to par for Symantec, the half-a-billion investment by Silver Lake definitely pulled the company through this report.

Silver Lake announced that it will make a $500 million strategic investment in Symantec. In connection with Silver Lake’s investment, the Symantec board of directors increased the company’s total capital return program to $5.5 billion. Through this capital return, Symantec will return to its shareholders funds representing all of the after-tax cash proceeds from the recent sale of Veritas.

The Symantec board expects to complete the full $5.5 billion capital return by the end of March 2017 in the form of:

• $500 million accelerated share repurchase completed in January 2016
• A special dividend of $4.00 per share, equaling $2.7 billion
• $2.3 billion in future share repurchases

The $4.00 per share special dividend will be payable on March 22 to stockholders of record as of the close of business on March 8. The special dividend will be in addition to Symantec’s quarterly dividend.

In conjunction with Silver Lake’s investment, Ken Hao, managing partner of Silver Lake, will be appointed to Symantec’s board of directors, effective at the close of the investment. With Hao’s appointment, the Symantec board will be composed of 10 directors, nine of whom are independent.

Michael A. Brown, president and CEO, commented on earnings:

We are entering the second half of our transformation with a stronger foundation, evidenced by new products that are gaining mindshare among customers, better top-line performance, and a clear path to long-term profitability. I’m pleased with the progress we’ve made against our priorities, including strengthening our security portfolio, enhancing our go-to-market capabilities, improving our cost structure and efficiently allocating capital.

Shares of Symantec were up 7.8% Friday morning at $20.68, with a consensus analyst price target of $23.39 and a 52-week trading range of $18.31 to $26.36.