Symantec failed to report growth
Symantec (SYMC) recently reported its fiscal 1Q17 earnings. Its reported revenues and non-GAAP[1. generally accepted accounting principles] EPS (earnings per share) of $884 million and $0.29, respectively, beat analysts’ expectations by ~$7.0 million and $0.04, respectively.
Despite Symantec’s 1Q17 results beating analyst estimates, its revenue of $884 million fell by 3.1% on a YoY basis. However, its non-GAAP EPS of $0.29 grew by 12% on a year-over-year (or YoY) basis. Fiscal 1Q17 marked the 11th straight quarter when Symantec failed to report growth in revenues.
Symantec’s operating segments’ performance
As the above chart shows, Symantec generated a majority of its revenues from its Content, Subscriptions, and Maintenance segment in fiscal 1Q17. A shift in consumer preferences toward subscription offerings hampered Symantec’s License segment’s revenues and consequently, its Enterprise Security revenues.
In 1Q17, Symantec’s License revenues fell by 14% to $24 million while its Content, Subscription, and Maintenance revenues fell by 3% to $860 million.
Symantec’s Consumer Security segment has been impacted by continued softness in the personal computing market, which is primarily focused on PC security solutions. In 2Q16, PC shipments fell by 5.2% to 64.3 million units in 2Q16, as stated by Gartner.
Apart from softness in the PC space, the changing IT scenario, and the emergence of new cybersecurity players like Palo Alto Networks (PANW), Fortinet (FTNT), and FireEye (FEYE) has made it challenging for Symantec to report revenue growth.
Later in the series, we’ll see how Symantec aims to reverse this scenario through its latest acquisition of Blue Coat Systems.
Investors who want exposure to Symantec can consider investing in the PowerShares QQQ ETF (QQQ). QQQ has an exposure of ~27% to application software. It invests ~0.3% of its holdings in Symantec.