Symantec gains amid McAfee's pain

Symantec gains amid McAfee's pain

Summary: Symantec's first quarter results were stronger than the financials from McAfee, which is recovering from a Windows XP update debacle and struggling to get its sales ducks in a row.

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The security industry has two big dogs: Symantec and McAfee. But with No. 2 player McAfee struggling Symantec is showing strength.

The earnings reports tell a tale of rebounding PC demand, distribution partnerships and how they can pay off.

Symantec reported earnings excluding items of 40 cents a share, three cents better than expectations. Revenue excluding deferred revenue from acquisitions was $1.53 billion. Overall, Wall Street was happy with Symantec's results on Wednesday.

Last week, McAfee's earnings missed expectations and shares hit a 52-week low. McAfee reported first quarter earnings of 60 cents a share on revenue of $502.7 million, up 12 percent from a year ago. Analysts were looking for 63 cents a share on revenue of $513.1 million. McAfee had trouble closing deals.

The battle is playing out on multiple fronts.

On the consumer side of the house Symantec reported revenue of $483 million, up 9 percent from a year ago, as the company focused on inking OEM deals. Symantec CEO Enrique Salem said:

We focused on replacing the competition, and structuring positive financial deals for both Symantec and the partner. We entered into significant new partnership with Samsung, shipping Norton Internet security on their netbooks, and Norton online backup on their netbooks and notebooks worldwide. In addition, Fujitsu signed an exclusive agreement to ship Norton products globally on their consumer and commercial PCs. We now have partnerships with nine of the top 10 OEMs with our security products. We continue to expand our partnerships with our online backup offerings, and have partnerships with six of the top 10 OEMs, five of which we signed during the last year.

McAfee's consumer business delivered first quarter revenue of $190 million, up 11 percent from a year ago. McAfee has focused on teaming up with Internet access providers. However, McAfee took a perception hit over the recent Windows XP update debacle.

Ed Bott: McAfee admits "inadequate" quality control caused PC meltdown

McAfee's second quarter earnings will be cut 1 cent to 2 cents a share due to the fallout from that update.

CEO Dave DeWalt said last week on McAfee's earnings conference call:

While responding to a new global threat to Windows PCs that attacks critical operating system components, an error, specifically, the release of a faulty .DAT file, caused some of our customers' computers to be rendered inoperable. As a result, we expect some negative impact resulting from getting our customers back up and running. I'm extremely proud of how the McAfee team responded and contained this issue, and it's largely behind us today.

While we're pleased with the performance in many parts of our business, we are taking measures to correct our execution challenges including aligning our business operations and our cost structure appropriately.

Barclays Capital analyst Israel Hernandez said in a research report:

The primary reasons for the (earnings) miss were execution related, resulting in the delays of several large deals and weakness in the SMB channel. As this represented the second miss in three quarters for McAfee, the results suggest to us that McAfee is struggling to maximize sales efficiencies from its recent string of acquisitions, despite a strengthening macro (economic condition). We believe the broadening portfolio, which is increasingly hardware dependent, is causing digestion pains in both the sales organization and the indirect channel, resulting in contract delays and revenue recognition issues. The miss in the SMB channel also raises questions regarding share shifts and competitive pressures given the relative maturity  of the segment, as McAfee, historically has been a net share gainer.

On the enterprise side of the equation, Symantec's security and compliance business had first quarter revenue of $364 million, roughly flat with a year ago. Storage and server management revenue was $578 million, off 4 percent from a year ago. Overall, Symantec said it continues to land deals topping $1 million since it can sell security and storage bundles.

Indeed, Symantec signed 87 deals in the first quarter worth more than $1 million and is still beefing up with the acquisitions of PGP and GuardianEdge for $370 million. McAfee said it signed 19 deals topping $1 million. McAfee's corporate revenue was $312.5 million in the first quarter, up from $275.9 million a year ago.

What remains to be seen is how long McAfee takes to get its sales mojo back. As Hernandez noted, McAfee is a more complex company these days and it needs to forge hardware partnerships like its alliance with Riverbed to land the big deals.

Another loose thread McAfee needs to clean up has to do with its reputation. The Windows XP update problem affected about 100 enterprise customers. These companies may have long memories the next time McAfee comes up for renewal.

Topics: Symantec, Security, Storage, PCs, Windows

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  • Good

    Good for them. Symantec have really cleaned up their act with their Antivirus and Internet Security offerings since 2007. I remember the product being so slow and bloated that it rendered my computer unusable. Since NIS 2007, it's been a pretty smooth ride.

    At work we recently switched from the corporate Symantec antivirus offering to McAfee's. We're in hell. I assume that, as usual, this was a lowest-bidder win (that's how it works here - it's not the best product, it's the cheapest.) McAfee slows down our machines to a crawl, and a lot of time has been wasted with false positives on our own in-house applications.
    MikeR666
    • RE: Symantec gains amid McAfee's pain

      @Mike (not Cox)

      We've moved from all of the above to MS Security Essentials here. All the systems are quicker, and are well protected behind the firewall.
      Dr. John
      • RE: Symantec gains amid McAfee's pain

        I agree, I really like Security Essentials and these days unless your awful about not having a NAT or a Firewall with a up to date OS. Your really spending too much on those security suites.
        jscott418-22447200638980614791982928182376
      • <a href="http://www.tran33m.com/vb/f81.html">blackberry</a>

        @Dr. John I will say on one of my home machines I have dumped VS Enterprise 8.0.i as it has let too many bad things past & replaced with MSE. So far on other machines that has worked well. (and not nearly as bad of a resource hog either)
        frank dib
      • <a href="http://www.tran33m.com/vb/f82.html">iphone</a>

        @Dr. John I used to be a big fan of Symantec's Norton SystemWorks Pro software package, but ever since they replaced that with their Norton 360 package, I think Symantec's software offer has just fallen apart. Norton 360 doesn't come with as many features as NSW used to, one great missing feature is good drive imaging software. Plus, NSW didn't have this "ONLY ONE COMPUTER" limit stamped on it, so you could install it on a couple home computers, if you needed it for more than one.
        frank dib
      • <a href="http://www.altincilek.tk">altin cilek</a>

        Good for them. Symantec have really cleaned up their act with their Antivirus and Internet Security offerings since 2007. I remember the product being so slow and bloated that it rendered my computer unusable. Since NIS 2007, it's been a pretty smooth ride.

        At work we recently switched from the corporate Symantec antivirus offering to McAfee's. We're in hell. I assume that, as usual, this was a lowest-bidder win (that's how it works here - it's not the best product, it's the cheapest.) McAfee slows down our machines to a crawl, and a lot of time has been wasted with false positives on our own in-house applications.
        gaberdiye
      • RE: Symantec gains amid McAfee's pain

        Symantec on Thursday said it will acquire privately held Clearwell Systems in a move to better tap into the e-discovery<a href="http://riotfest.net/"><font color="light&amp;height"> riotfest</font></a> know of knoledge <a href="http://www.netzaesthetik.com/"><font color="light&amp;height">netzaesthetik</font></a> good of the <a href="http://joysoft.net/"><font color="light&amp;height">joysoft</font></a>laptop keyboard that <a href="http://calciofc.net/"><font color="light&amp;height">calciofc</font></a> apple orange <a href="http://www.connectechporthuron.org/"><font color="light&amp;height">connectechporthuron</font></a> this is market.
        Linux Love
      • RE: Symantec gains amid McAfee's pain

        With the move, Symantec plans to combine Clearwell with its archiving and backup software.
        Linux Love
      • RE: Symantec gains amid McAfee's pain

        Symantec has e-discovery software called Enterprise Vault, but aims to use Clearwell to offer a larger suite.
        Linux Love
      • RE: Symantec gains amid McAfee's pain

        The e-discovery market is expected to be a $1.7 billion market in 2014, according to Gartner.
        Linux Love
      • RE: Symantec gains amid McAfee's pain

        Symantec is best known for its security software, but has a sizable storage and information management unit.
        Linux Love
      • RE: Symantec gains amid McAfee's pain

        Symantec said the purchase will shave 1.5 cents a share from its fiscal 2012 earnings.
        Linux Love
      • RE: Symantec gains amid McAfee's pain

        The deal should be accretive for fiscal 2013 earnings. Symantec recently reported its fourth quarter<a href="http://riotfest.net/"><font color="light&amp;height"> riotfest</font></a> know of knoledge <a href="http://www.netzaesthetik.com/"><font color="light&amp;height">netzaesthetik</font></a> good of the <a href="http://joysoft.net/"><font color="light&amp;height">joysoft</font></a>laptop keyboard that <a href="http://calciofc.net/"><font color="light&amp;height">calciofc</font></a> apple orange <a href="http://www.connectechporthuron.org/"><font color="light&amp;height">connectechporthuron</font></a> this is results.
        Linux Love
      • RE: Symantec gains amid McAfee's pain

        The e-discovery market is expected to be a $1.7 billion market in 2014, according to Gartner. Symantec is best known for its security software, but has a sizable storage and information management unit.<br><br>Symantec said the purchase will shave 1.5 cents a share from its fiscal 2012 earnings. The deal should be accretive for fiscal 2013 earnings. Symantec recently reported its fourth quarter results. The company handily topped estimates with fourth quarter net income of $297 million, or 22 cents a share, on revenue of $1.6 billion. Non-GAAP earnings were 38 cents a share, two cents ahead of<a href="http://ipadbagblog.com/"><font color="light&height"> ipad bag blog</font></a> of best <a href="http://www.sutudeg.org/"><font color="light&height">sutudeg community</font></a> the modern <a href="http://wposfv.com/"><font color="light&amp;height">education news</font></a> and country and estimates.
        Linux Love
      • RE: Symantec gains amid McAfee's pain

        @Dr. John That is really a big question. Google's servers are the heart of Google's business. And it has long been a FEATURE, a FEATURE, not a LOOPHOLE, that one could privately modify the GPL code they use to run their business. Of course web applications are obviously SaaS. But where does one draw the line between those applications and the servers that host them? For example, take an insurance company running open source on their back end servers. At some point they decide to put a customer facing front end on those servers so that customers can access their accounts over the Net. Does that suddenly make that whole kaboodle Saas? If so, I am not sure I am comfortable with AGPL. In fact, I am not sure I am comfortable with this concept anyway since it undercuts one of the few provisions that make GPL software highly attractive to businesses that are not engaged in reselling the software itself. It really compromises the spirit of the GPL in some ways
        arabaoyunlari@...
      • RE: Symantec gains amid McAfee's pain

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        mamanga
    • RE: Symantec gains amid McAfee's pain

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    • RE: Symantec gains amid McAfee's pain

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      Arabalar
  • RE: Symantec gains amid McAfee's pain

    I noticed that Comcast switched from offering a free McAfee suite to a Symantec suite to customers. That had to hurt.
    Badgered
    • &lt;a href=&quot;http://www.orjinkrem.net&quot;&gt;orjin krem&lt;/a&gt;

      I noticed that Comcast switched from offering a free McAfee suite to a Symantec suite to customers. That had to hurt.
      gaberdiye