Symantec Beat 3Q16 Estimates despite the Strong Dollar
SYMC’s fiscal 3Q16 results beat analysts’ expectations
On February 4, 2016, Symantec (SYMC) announced its fiscal 3Q16 results as scheduled. Leading players like Microsoft (MSFT), IBM (IBM), Intel (INTC), and SAP (SAP) announced their earnings in January 2016.
Symantec reported revenues of $909 million and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.26 in fiscal 3Q16, which beat analysts’ expectations by $3.2 million and $0.02 cents per share, respectively.
Strong dollar impacted Symantec’s growth in 3Q16
Though Symantec’s fiscal 3Q16 revenue beat analysts’ expectations, it fell 6.3% on a YoY (year-over-year) basis. In constant currency terms, this decline was 2%. Like its peers in the technology space including IBM, Microsoft, and Oracle, the US dollar (UUP) continued to impact Symantec’s performance.
2015 was one of the best years for the dollar, as the above chart shows. The UUP ETF replicates the price movements of the US dollar index. The dollar continued to rise in 2015 with occasional hiccups amid falling commodity prices, a slowing global economy, and the Fed’s first rate hike in almost a decade. The dollar started 2016 on a bullish note. This trend is expected to continue for some time. Symantec’s management stated that the US dollar “created a headwind of approximately $40 million to third quarter revenue on a year-over-year basis.”
US dollar on declining trend since late January 2016
As the above chart shows, since late January 2016, the US dollar index has been on a declining trend after hitting an 11-year high against the basket of currencies, which happened due to the consensus of a gloomy outlook for major US companies like Microsoft, Dupont, Procter & Gamble, and Pfizer (PFE).
The US dollar also fell ahead of the two-day Federal Open Market Committee (or FOMC) meeting on January 27 and 28, 2016. Weakness in domestic data like wage growth, lower inflation due to low oil prices, and dovish comments by William Dudley, president of the New York Fed, primarily contributed to the US dollar’s fall.