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Symantec Accelerated Its Share Buyback Program in Fiscal 2Q16

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Symantec announced $500 million accelerated share buyback program

So far in this series, we discussed Symantec’s (SYMC) fiscal 2Q16 performance, its operating segments’ performance, and the segments that are expected to drive the company’s growth. In fiscal 2Q16, Symantec—as expected with the $8 billion sale of Veritas—announced the buyback of $500 million in shares. The company noted that this buyback would be executed “as soon as possible.” This program joins the company’s share buyback program of ~$125 million in shares intended for fiscal 3Q16. So far, ~$105 million has been completed to date.

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Symantec (SYMC) continued to follow its policy of returning value to its shareholders through dividends in fiscal 2Q16. It declared a cash dividend of $0.15 per share in fiscal 2Q16. The company returned $262 million to shareholders with $102 million in cash dividends and $160 million in share buybacks.

Symantec recently stated that it expects to return about 120% of its after-tax domestic cash proceeds from the Veritas sale to its shareholders, through share buybacks and dividends in the next 1.5 years.

Cash, debt, and cash flow position

In fiscal 2Q16, Symantec reported that it has $3.35 billion in cash, cash equivalents, and short-term investments. As of October 2, 2015, Symantec carried $1.7 billion in total debt on its books, all of which is long-term debt.

Symantec’s cash reserves are expected to soar as the company is likely to receive ~$6.3 billion in net cash from the Veritas sale, after paying a tax of ~20% on the $8 billion sales price. In 2014–2015, several US corporations, including Symantec, Hewlett-Packard (HPQ), eBay (EBAY), EMC (EMC), and SanDisk (SNDK), announced or completed deals to split themselves up or get acquired.

Its operating cash flow stood at $134 million in fiscal 1Q16. As a subscription offerings business, Symantec enjoys a negative cash conversion cycle, meaning that it can manage its working capital judiciously.

Fiscal 3Q16 expectations

For fiscal 3Q16, Symantec expects revenues to be in the $890 million–$920 million range. It expects non-GAAP EPS between $0.22–$0.25 per share.

You can consider investing in the iShares US Technology ETF (IYW) to gain exposure to Symantec. IYW invests about 0.45% of its holdings in Symantec.

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