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Can Symantec’s Consumer Security Software Segment See a Recovery?

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Symantec’s Consumer Security segment continued its fall in 2Q16

Previously in this series, we discussed Symantec’s (SYMC) fiscal 2Q16 performance. With the Veritas sale, Symantec is left with its Consumer Security and Enterprise Security operating segments. Let’s discuss the performance of the Consumer Security segment in this article.

In fiscal 2Q16, Symantec’s Consumer Security segment posted $420 million in revenues, a 13% decline on a year-over-year basis. Among all the operating segments, the Consumer Security segment was the only one to post a double-digit fall in revenue. In constant currency terms, this was an 8% fall.

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Sluggish PC market marred Consumer Security segment revenues

The continued sluggishness in the PC market impacted Symantec’s consumer security offering, Norton Security Suite, which is primarily focused on PC-based security solutions. When we discussed Symantec’s 1Q16 earnings, we noted that PC shipments are considered to be the driving factor behind consumer security software sales. As a result, any softness in the PC market directly impacts revenue growth in this segment.

Microsoft’s (MSFT) Windows 10 launch and Intel’s (INTC) Skylake CPU platform were part of the initiative to revive demand in the declining PC market. However, if we look at the 3Q15 PC shipments, which fell by 7.7%, it is apparent that both the Windows 10 launch and the Skylake CPU platform could take some time to provide growth in the PC space.

An earthbound PC market forced IBM (IBM) to exit the PC space by selling its server business to China-based (FXI) Lenovo (LNVGY). It also forced Hewlett-Packard (HPQ) to split.

The weakness in the Consumer Security Software segment is expected to continue in the short term due to the dismal PC sales outlook in 2015. Symantec expects its Norton Security Suite revenues to decline by 5%–8% on a year-over-year basis in fiscal 2016.

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