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How Do Symantec’s Revenue Growth Prospects Look?

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License and subscription revenues continued to decline in fiscal 2Q16

In the previous part of this series, we saw that Symantec’s (SYMC) fiscal 2Q16 revenues were in line with the analysts’ expectations. With its information management business, Veritas, out of the way, the company’s investors are interested in knowing where the company is headed now. The Veritas sale has transformed Symantec into a pure-play security player. Now, the market and its investors expect the company to focus on enhancing and expanding its Enterprise Security business, which is expected to be its next growth avenue.

In fiscal 2Q16, Symantec’s Content, Subscription, and Maintenance and License segments reported $1.33 billion and $165 million in revenue, respectively. Revenue from the License segment as well as the Content, Subscription, and Maintenance segment fell by 7.7% and 4%, respectively.

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Transition and Veritas sale claimed Symantec’s priority over revenue growth

As the above chart shows, Symantec’s revenues have been declining in the past couple of quarters. As in fiscal 1Q16, Symantec’s exit from original equipment manufacturer (or OEM) contracts in the Consumer Security Software segment, as well as the transition to a subscription-based model, impacted its revenue growth in fiscal 2Q16. It can be assumed that Symantec’s involvement in the completion of the operational aspects of the separation of Veritas would have diverted the company’s focus from revenue growth, as its fiscal 2Q16 revenue shows.

Recently, technology players like Hewlett-Packard (HPQ) and eBay (EBAY) were forced to give in to investors’ rising pressure and announce their splits. In October 2015, EMC (EMC) also agreed to its buyout for $67 billion by Dell in what is considered to be the biggest technology buyout to date, following its buyout by its own subsidiary VMware (VMW).

You can consider investing in the PowerShares QQQ Trust ETF (QQQ) to gain exposure to Symantec. QQQ invests about 0.32% of its holdings in Symantec.

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