Symantec Corp. is benefiting as hacking attacks fuel higher demand for cyber-security software, while cost cuts are bolstering profits.
The biggest maker of antivirus tools issued a revenue forecast that topped projections. Sales in the fiscal first quarter will be $1.65 billion to $1.69 billion, the company said in a statement today. Analysts, on average, are predicting revenue of $1.64 billion for the period that ends in June, according to data compiled by Bloomberg.
Spending security software and equipment is on track to increase 9.1 percent this year to $71.7 billion, according to Gartner Inc. The forecast buys the struggling company time as it deals with a management transition and a market that is shifting to smartphones and tablet computing, where security tools aren’t as widely used. Two chief executive officers have left in as many years, and the company has hired bankers to explore strategic options and defend against activist investors.
“They still have a real story to tell around security,” said Patrick Walravens, an analyst at JMP Securities in San Francisco who has the equivalent of a buy rating on Symantec shares. “They’re still the No. 1 player in the space — that gives them a lot of advantages.”
The shares of Symantec rose as much as 4.9 percent in extended trading. The stock declined less than 1 percent to close at $20.13 in New York, leaving it down 15 percent so far this year.
For the fiscal fourth quarter, which ended March 28, net income rose to $217 million, or 31 cents a share, from $190 million, or 27 cents, a year earlier.
Revenue fell 7 percent to $1.63 billion. Sales declined in each of Symantec’s key business units — consumer security business security, and data storage — yet profit rose because of lower costs, helped by job cuts. Sales and marketing expenses were 16 percent lower than last year at $584 million.
“Overall you’d call it a C+ type earnings, but that’s what investors were expecting,” said Daniel Ives, an analyst at FBR Capital Markets & Co. in New York who has the equivalent of a hold rating on the stock. “They cut their way to show better performance on the bottom line. You can’t cut your way to growth; that continues to be the issue.”
Profit, excluding items, will be 41 cents to 43 cents a share in the current quarter, Symantec said, compared with the average analysts’ estimate for 43 cents.
Symantec is under pressure to break up the company amid slowing demand for antivirus software, which is now widely seen as incapable of catching all but the easiest-to-catch attacks. Bloomberg News reported April 5 that Symantec was hiring JPMorgan Chase & Co. to explore its strategic options and defend against activist shareholders.
Symantec fired CEO Steve Bennett in March after less than two years on the job. His ouster came amid a sales slowdown and after the departure of top executives including Chief Financial Officer James Beer and Francis deSouza, president of products and services.
Bennett, who previously was CEO of TurboTax software maker Intuit Inc., had cut 1,000 jobs, or 5 percent of staff. He engineered a restructuring of Symantec’s sales force that was meant to help restart growth and instead disrupted customer relationships. Bennett had replaced Enrique Salem, who was ousted in July 2012. Both executives resisted pressure to sell Symantec’s data-storage business, which Symantec entered with its $10.2 billion acquisition of Veritas Software Corp. in 2005.
Symantec said it bought back $125 million worth of its shares in the latest quarter and has $658 million remaining for stock repurchases.