Is it Time to Short Symantec?

[omidomi]

Content source

http://moneymorning.com/market-news/is-it-time-to-short-symantec/

The next biggest threat will not likely be on the ground but one through our computers. New and old companies are working hard to make sure that those threat never become a reality. They include Cisco, Check Point, Palo Alto Networks, Imperva and Symantec to name a few. Symantec, in particular, has been hit hardest from the transition away from software security to data protection. This has reflected earnings and sales which both declined 50% last quarter compared to a year earlier. The stock is also down 34% from a year earlier and 20% year to date.

The Estimize community is looking for earnings of a quarter per share on $887.54 million in revenue, 1 cent higher than Wall Street on the bottom line and $5 million on top. Compared to a year earlier both earnings and sales are expected to fall 40%. Fortunately for Symantec, the stock is typically unscathed leading up and through earnings.

Symantec’s core Norton anti virus business has taken a beating from weak PC sales, unfavorable exchange rates and a changing environment. Competitive threats from the aforementioned companies and increased usage of smartphones and tablets have also had an adverse impact. As a result, the company is in the midst of a strategic transformation that involves a heavy focus on internet and endpoint security markets.

On the bright side, the company’s innovative products and solutions in the cloud and mobile space have slowly gained acceptance. Data security happens to be one of the fastest growing industries today which should bode well for Symantec. Furthermore, Symantec finally completed the sale of its information management division, Veritas. The deal valued at $7.4 billion will provide Symantec with funds to continue its expansion efforts. That said, this doesn’t look like the quarter that the company turns it around and posts positive growth.

 

[_CyberGhosT_]

Thats sad.
Symantec is a oldie but goodie as they say, been around for a very long time. When they did away with Norton 360 I stopped buying their AV solutions. I do utilize their DNS servers because "for me" they are very fast and reliable.
I hope Symantec finds it niche and recovers.
Great share OmiDomi.
PeAcE

 

[cruelsister]

Not a good short. Although thier growth is sluggish, it still should be about 8% next year. Factoring in about $3.50/share in cash and yearly 2017 earnings being about 1.10. the PE will be at a historic low.

Personally I'd think their cash could be put to work better by picking up FireEye on the cheap.

 

[Entreri]

Haven't used Norton product in a decade, other vendors have passed them by on the PC security front.

Mobile market is full of anti-malware vendors, a lot offering it free. Do they still have lucrative government contracts or is it McAfee now?

Shorting, no idea. I wished I shorted Valeant Pharma, saw that coming, but was too chicken.

 

[cruelsister]

Entreri- Their contracts are still in place, and sadly will be there for a while. Although solutions from Cisco, FireEye, and Palo Alto provide higher levels of security they also would entail a high level of transition capital which many companies want to avoid at this time of reduced profits. As for Symantec, they are shifting from licenses, which have a larger up-front cost to cloud-based subscriptions which generate recurring revenue over a longer period; so although it will take a bit of time their earnings and profits will at the minimum stabilaize.