Symantec's strategy of selling security and storage together is apparently paying off as companies consolidate the number of vendors they use.
The security and storage management software company reported strong fiscal first quarter results (statement) as net income more than doubled from a year ago. Symantec reported first quarter earnings of $187 million, or 22 cents a share, compared to $95 million, or 10 cents share a year ago. Excluding charges, Symantec reported earnings of $342 million, or 40 cents a share, well ahead of Wall Street projections of 35 cents a share. Revenue was $1.65 billion, up 16 percent from a year ago.
Symantec also upped its outlook for the second quarter and projected revenue between $1.52 billion and $1.56 billion and earnings between 15 cents a share and 17 cents a share. Excluding charges Symantec sees earnings between 34 cents a share and 36 cents a share.
Under the surface it appears that Symantec is winning more wallet share. Symantec had 336 agreements worldwide versus 249 in the same period a year ago with a contract value of more than $300,000 each. Of the 336 agreements, 85 had a value of more than $1 million compared to 48 a year ago. And 80 percent of those transactions included multiple products.
Meanwhile, Symantec is weathering economic uncertainty well. On the company's conference call, CEO John Thompson said:
The June quarter results highlight the critical nature of our product portfolio to customers around the world. In addition we saw CIOs of large enterprises purchase more products from Symantec as they strive to reduce the number of vendors they much manage. This is a trend we expect to continue particularly during these more challenging economic times...
I think its fair to say that there are a number of customers out there that are cautious in their view of what their spending plans are for the second half of this calendar year and so we can’t be unmindful of that but by the same token we happen to have key product portfolio items in security and storage management which are almost un-deferrable expenditures for them as their data volumes continue to grow. So as data volumes grow so will our business independent of perhaps the broader macroeconomic environment. While we’re not immune we think we do have some degree of insulation from that problem.
Thompson added that the pipeline for September also looks strong. Could it be that Symantec's security and storage strategy is working? Symantec had bought Veritas to enter the storage software market but the results of the combination have been spotty over the quarters. Now Symantec is in storage, security and virtualization via the purchase of Altiris.
"I also think you’re starting to see a little bit more of products that are not just either storage or security but the combination of the two," said Enrique Salem.
To Symantec all of these ventures flow together to manage and secure data:
Let me put our strategic intent around virtualization in context for you today. At the endpoint our strategy is based on freeing valuable information from the underlying systems functions. Today important enterprise information is scattered across a broad range of devices from PDAs to storage arrays. This valuable information is deeply entangled with other data such as operating systems and application code, which is far less valuable to any enterprise.
We believe that virtualization when properly applied can decouple information that matters from the rest of IT environment so that it can be independently secured and managed. To help our customers achieve this benefit Symantec is infusing virtualization capabilities across our portfolio from server management and high availability to security.
If CIOs are really consolidating vendors and gravitating to the big vendors Symantec could be in a good position to leverage its storage and security beachhead.
Other odds and ends worth noting:
- Symantec's Vontu team had its best quarter ever and closed its largest data loss prevention deals ever.
- Norton 360 represents more than 35 percent of the company's consumer sales.
- Storage and server management software was 37 percent of Symantec's revenue as sales jumped 12 percent from a year ago with the consumer business accounting for 29 percent of the total (up 12 percent. Security and compliance software was 27 percent of Symantec's revenue total with services coming in at 7 percent.
- Fifty two percent of revenue was international.