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Symantec Corporation Message Board

  • long_term_tech_investor long_term_tech_investor Oct 24, 2012 7:18 PM Flag

    Suspect Results and Lowered Guidance

    Okay Longs, please pay attention: I am on your side, anybody thinking otherwise hasn't been paying attention the last many years. Having said that, I do not for one moment buy the earnings that just transpired. And proof was just released on the press wire that what I suspected regarding guidance is indeed correct. GUIDANCE WAS LOWERED - QUITE A BIT

    "The company issued a profit outlook for fiscal third-quarter, which ends in December, that was below Wall Street expectations as Bennett said he plans to boost spending in some areas. Symantec said it expects to post third-quarter profit, excluding items, of 36 cents to 38 cents per share, below the average forecast of 42 cents, according to Thomson Reuters I/B/E/S. It forecast third-quarter revenue of $1.72 billion TO $1.75 billion, compared with the average forecast of $1.72 billion.
    Bennett said that the profit shortfall was partly due to plans to boost investment in some areas, including providing technical support for its products, where the company had wrongly cut back to keep expenses down."

    So they are now going to SPEND more to replace resources they should never have CUT to make false EPS previously. Are you starting to get the picture yet??

    Also, any of you who may have worked at, or currently work at, a large tech company know full well what happens when a new CEO comes on board. The subordinate managers go into an absolute panic and start pressuring by any means necessary to meet numbers within their respective teams. As such, I am quite confident that quarter-loading is largely responsible for how Symantec miraculously hit numbers this quarter, and it is being masked by the very non-trivial guidance being lowered for next quarter. The growth rate in the various products is simply not there to explain otherwise, not to mention a major problem in a key product area (BackupExec IIRC), a horrid macro environment and most other large-cap techs missing numbers.


    I would recommend taking advantage of any run this week or at a minimum remain protected. I further would especially advise not to add to positions above the 18 range, at least not before next quarter after the new "strategy" is rolled-out. We need to see how the technicals transpire as well.

    Everyone is free to ignore what I post, there is even an "ignore" button on the forum for such convenience. But you would be wise to pay attention and remember we are dealing with slight of hand as much as ever, it is the nature of Wall Street and corporate capitalism. I still need to sift through the earnings in more detail and the transcript from the call again. Will also be interesting to watch which analysts react in which fashion tomorrow.


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    • long_term_tech_investor long_term_tech_investor Oct 24, 2012 10:55 PM Flag

      More facts coming out - here's potions of the transcript, things are NOT as they seem just as suspected....

      "I'd like to spend a moment on our guidance for the December quarter. We're pleased that revenue and deferred revenue continue to grow year-over-year and sequentially, especially in this uncertain global economic environment. However, operating margin is lower in the December quarter than either the September or year ago December quarters. This may seem counter to what I told you in September, that we would self-fund investments without reducing operating margin. And that's still my commitment."

      After our January announcement, we will self-fund this and future investments without reducing operating margin. But we need to make these investments now and not wait until after the January announcement to set the foundation for longer term organic growth. The investments will be allocated to areas like technical support, so we better serve our customers and partners. This is the right thing to do to create long term shareholder value, no matter where we come out on our strategy and operational plan announcement in late January."

      TRANSLATION: The CEO promised one thing and already is turning around going against his promise to self-fund, and instead using EPS from next quarter. And the investments cited are typically not a one-quarter impact, which makes this even more suspect.

      Here's another interesting point:
      "Our subscription business continues to grow. In constant currency, content, maintenance and subscription revenue grew 7%, while license revenue declined 9%. Subscription revenue, which includes our consumer, authentication, MSS and SaaS offerings accounted for 45% of total revenue."

      This seems to indicate that while subscriptions increased, license revenue declined by a greater amount, and may constitute a greater proportion of overall revenue as well.

      Now, here comes the smoking gun which in my opinion solidifies the quarter-stuffing theory:

      "The Consumer business grew 3% year-over-year to $528 million and generated its 16th consecutive quarter of growth. These results were driven by up-selling customers to our premium suites at improved pricing and growing our emerging backup, NortonLive Services and mobile businesses."


      It is quite apparent what is going on, but I suspect the analysts will play the Wall St. game and the small investor won't be able to see past the headlines.

      Interesting day ahead tomorrow I suspect....


    • According to this article Symantec MISSED on EPS as well as guided lower. The extent of the reaction after hours makes no sense, may be in large part short covering. Amazing what a headline about "Record Revenue" will do, especially when a dozen other mostly pre-written articles are suddenly released immediately thereafter.

      The Numbers: Symantec posted revenues above analyst predictions, though the company's EPS came up short of expectations. The company reported 27 cents per share versus the 33 cents per share estimate and revenues of $1.7 billion versus the $1.65 billion estimate.

      A Look Back: Gross margin shrank one percentage point to 83.3%. The contraction appeared to be driven by increased costs, which rose 7.2% from the year earlier quarter while revenue rose 1.1%.

      Looking Ahead: For the next quarter, analysts are growing pessimistic about the company's expected results. The average estimate (non whisper) for the third quarter is 37 cents per share, dropping from 38 cents a month ago. A decreasing earning estimate is a negative sign and usually leads to a drop in the stock price. For the fiscal year, the average estimate has been unchanged at $1.46 a share.

      Either way, the only glowing thing whatsoever is basically the slight beat in revenue, but the fact the EPS fell short helps solidify the theory of the quarter being stuffed by discounted deals at the expense of next quarter's opportunity.


    • I wonder instead of an ignore button... is someone can install a vanish button for your babbling nonsense... Don't you have something useful to do with your time? Maybe volunteer someplace...
      You are good at writing fiction... ever thought of writing preschool childrens stories?

      Sentiment: Buy

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