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Why Security Vendor Symantec May Need Its Own Protection

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Competition taking its toll on Symantec

Although businesses are spending increasingly more to guard against online hacking, cybersecurity vendor Symantec (SYMC) is finding it difficult to take advantage of the expanding market. In its most recent quarter, fiscal 4Q17 (calendar 1Q17), the company struggled to post in-line revenue and earnings.

In a move that seems to hint that Symantec is vulnerable to competition in its industry, the company guided softly for the current quarter on both earnings and revenue fronts.

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A $100-billion market

The opportunities in the cybersecurity industry are huge. What is needed is the ability to carve out a large share of the market and run away with it. Research firm IDC predicts that organizations will spend $101.6 billion on online protection in 2020. Cybersecurity spending was estimated to be $73.7 billion in 2016.

Symantec reported non-GAAP (generally accepted accounting principles) 4Q17 revenue of $1.18 billion, which was 35.2% higher annually and in line with the consensus estimate. Its adjusted EPS (earnings per share) of $0.28 also met expectations.

Downbeat guidance

While the company’s 4Q17 earnings and revenue results were largely in line with expectations, disappointment came in the company’s outlook for fiscal 1Q18. The company is guiding its current quarter revenue to be in the band of $1.13 billion–$1.16 billion, and it’s expecting EPS of $0.30. Those metrics pale in comparison to the consensus estimates calling for revenue of at least $1.27 billion and EPS of $0.38.

This soft guidance suggests that Symantec is battling tough competition from the likes of IBM (IBM), Cisco Systems (CSCO), Proofpoint (PFPT), and FireEye (FEYE) in the cybersecurity market.

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