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Security vendor roundup: Symantec Q2 mostly flat, FireEye billings fall short

While it may be speculative, the current states of Symantec and FireEye seem to suggest that the security vendor sector has hit a bit of a rough patch.

Security giant Symantec reported second quarter earnings and revenue Thursday, with results generally in line with expectations.

The Mountain View, Calif.-based company reported a net income of $156 million, or 23 cents per share (statement). Non-GAAP earnings were 44 cents per share on a revenue of $1.5 billion.

Wall Street was looking for earnings of 42 cents per share with $1.5 billion in revenue.

In prepared remarks, Symantec CFO Thomas Seifert said the separation of Symantec and its data storage business Veritas was completed on October 3.

Seifert noted that the Veritas sale to global asset management firm Carlyle Group LP for $8 billion is "on track" to occur by the end of its third quarter. Symantec has also received board authorization to accelerate the return of $2 billion to shareholders, which kicks off with a $500 million accelerated share repurchase, Seifert added.

First announced last October, the Veritas sale was all about narrowing Symantec's focus. By splitting into two brands, with Symantec sticking with the security business and Veritas taking the information management portfolio, Symantec believes it will be better equipped to invest in new technologies and keep up with rivals.

Veritas -- which earned the corporate monicker only this past January -- stems from technology Symantec purchased in December 2004 for $13.5 billion. The business unit was designed to consist of backup and recovery, archiving, eDiscovery, storage management, and information availability services.

Going forward post split, Symantec will retain consumer and enterprise endpoint security, endpoint management, encryption, mobile, Secure Socket Layer certificates, user authentication, data loss prevention, hosted and managed security, and mail, web and datacenter security services.

Looking at the broader security vendor landscape, Symantec seems to have found itself in a similar position as one of its rivals. Security vendor FireEye reported mixed third quarter earnings and revenue on Wednesday, with lower than expected losses and revenue above estimates at $165.6 million.

But FireEye's bookings came up short, and a reduced guidance sent the company's stock plummeting almost 15 percent after hours.

The same goes for Symantec, at least in terms of guidance. The company said it expects revenue in the range of $890 million to $920 million for the fiscal third quarter, whereas analysts had expected revenue of $1.63 billion.

FireEye CEO Dave DeWalt told MarketWatch that a slowdown in large-scale cybersecurity attacks from China resulted in shorter contracts and smaller deals for the company.

While it may be speculative, the current states of Symantec and FireEye seem to suggest that the security vendor sector has hit a bit of a rough patch. For FireEye, the key will be figuring out how to move past the one-size-fits-all defense for enterprise security and toward more specialized security offerings -- a strategy Symantec is in the process of figuring out.