Symantec's fiscal first quarter fell short of expectations as corporate customers opted for shorter-term maintenance and license renewals.
The company, which makes security and storage software, reported first quarter net income of $73, million, or 9 cents a share, down from $172 million, or 20 cents a share a year ago (statement). On a non-GAAP basis, Symantec reported first quarter earnings of $285 million, or 34 cents a share. Wall Street was expecting 35 cents a share. Symantec's revenue for the first quarter was $1.43 billion, down 13 percent from a year ago.
Analysts have noted that security spending has been spotty. In addition, competition has been fierce. In a research note, Jeffries analyst Katherine Egbert said:
In the backdrop of a weak economy, spending on Security and Compliance still appears soft. Our recent checks reveal particular weakness in the SMB market. We think intense competition from McAfee on larger deals could further the top-line pressure.
In a statement, Symantec CEO Enrique Salem said that enterprise customers aren't signing up for new licenses at a rapid clip. On the bright side, Symantec's deferred revenue is increasing. Salem noted that Symantec is laying the ground work for a better second half. The problem: Symantec's deferred revenue was $2.97 billion in the fiscal first quarter, down from $3.01 billion a year ago.
As for the outlook, Symantec projected second quarter revenue between $1.39 billion and $1.44 billion. Non-GAAP revenue is projected to be 32 cents a share to 34 cents a share. Wall Street was expecting earnings of 36 cents a share, according to Thomson Reuters. Here's a look at Symantec's first quarter with the trouble areas highlighted: