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Symantec Corporation : Investment That Pays Off In Long Term.

August 07, 2014 | About:
anandjha89

anandjha89

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Symantec Corp (SYMC) is going to webcast its quarterly earnings conference call on Wednesday, August 6, 2014 at 5 p.m. ET/2 p.m. PT to discuss the results of its fiscal first quarter, ended on July 4, 2014. Symantec Corp is calling out all interested parties to listen to Symantec interim president and CEO Micheal Brown and executive vice president and chief financial officer Thomas Seifert present the quarterly earnings results, highlights and guidance.

Wall Street anticipates that the security software and service company will earn $0.42 per share for the quarter which is $0.02 more than the last year’s profit of $0.44 per share. I expect Symantec to beat Wall Street’s consensus number by $0.46.

Sales, like earnings per share, are expected to slow, dropping by 2.3% year-over-year (YOY). The consensus revenue estimate for Q1 is $1.67 billion versus last year’s $1.71 billion.

Symantec is a cyber security, backup and availability solutions company. The company’s products and service protect people and information in any digital environment from the smallest mobile device to the enterprise data center to cloud-based systems. Symantec software and services protect against advanced threats independent of the devices and environment in which formation is used and stored. The company operated in five segments: Consumer, Security and Compliance, Storage and Server Management, Service and Other.

Goldman Sachs analyst Matthew Niknam believes 2014 will be a difficult year for the company. Symantec Corp may face many headwinds, but see “substantial improvement in free cash flows” to $1.3 billion from $1 billion.

Based on its discounted P/E ratio, Nikman sees little downside for Symantec. While there might not be much long-term downside. The company shares moved lower in the days surrounding two of the last three and three of the last five quarterly checkups. While brandishing five bullish surprises, the stock gained 2.82%, lost -3.95%, lost -14.76%, gained 10.84% and lost -1.84% from the most recent back.

That being said, Q1 has been rewarded three straight, gained 10.84%, 16.55%, and 2.2%, two of which were accompanied by bullish surprises and an on-target result. To close out last year, Symantec Corp. revenue dipped and management planned on revamping its sales team as a result. Perhaps Wednesday’s guidance will reflect the efforts of the new campaign?

Now, if Symantec does bump its budget for selling and marketing up, it could have a negative impact on margins. Last year, sales and marketing were lopped by -11.52% in an effort to hold the line on profit margins, which saved the company roughly $0.46 per share in operating profits for the year.

Final verdict

It is possible that the upgrading the sales team, if management lived up to its word, could cost Symantec Corp (SYMC) margins in the short-term; however, it should be an Investment that pays off in the longer-term.

About the author:

anandjha89
Anand focuses on Technology, with an eye for dividend income and long-term capital appreciation. He allocates a portion of his own portfolio, to small and medium sized companies offering compelling risk/reward propositions.

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