Symantec Earnings Miss Dominates Veritas Company Split

Computer Password
Source: Thinkstock
Symantec Corp. (NASDAQ: SYMC) reported fiscal fourth quarter and full year 2015 results after markets closed on Thursday. For the quarter, the network security software maker posted adjusted diluted earnings per share (EPS) of $0.43 on adjusted revenues of $1.55 billion. In the same period a year ago, the company reported EPS of $0.25 on revenues of $1.63 billion. Fourth-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.44 and $1.56 billion in revenues.

For the full fiscal year Symantec posted EPS of $1.88 on revenues of $6.54 billion compared with 2014 EPS of $1.95 and revenues of $6.7 billion. Consensus estimates called for EPS of $1.89 on revenues of $6.55 billion.

On a GAAP basis Symantec posted quarterly EPS of $0.25, down 19% year-over-year and full-year EPS fell 2%.

Operating margin fell 880 basis points year-over-year in the fourth quarter and 640 basis points when adjusted for foreign currency effects. Cash flow from operations rose 9% to $488 million in the fourth quarter and rose 2% to $1.31 billion for the full year.

Symantec’s split will result in an information management company which it says it has rebranded under the name Veritas. Symantec paid more than $10 billion to acquire Veritas Software in 2005. The security software portion will continue to operate under the Symantec name. The split is expected to be completed by the end of this year.

The company’s CEO said:

Fiscal 2015 was a transformative year for Symantec, as we announced our unified security and information management strategies, delivered more than fifty products, and made the decision to separate Symantec and Veritas into two standalone companies.

The company guided first quarter 2016 revenues of in a range of $1.5 to $1.54 billion and adjusted EPS in the range of $0.41 to $0.44. Consensus estimates call for first quarter EPS of $0.45 on revenues of $1.62 billion. For the 2016 fiscal year the company forecasts revenues of $6.21 to $6.35 billion and adjusted EPS of $0.86 to $0.96. Analysts are looking for EPS of $1.90 on revenues of $6.38 billion.

Symantec offered no insight into what went into its guidance, but the proposed separation of its two businesses, due to be completed by the end of the year, does not appear to be the culprit. The guidance for the full year will weigh the stock down heavily tonight and tomorrow.

Symantec’s shares traded down about 2.7% at $25.20 in after-hours trading Thursday, in a 52-week range of $21.07 to $27.32. Thomson Reuters had a consensus analyst price target of around $25.20 before today’s report, and the high target is $30.00.


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