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Symantec outlook overshadows strong profits

Second-quarter results beat analyst expectations but Symantec cut its third-quarter forecast on fears of weak consumer spending
Written by Larry Dignan, Contributor

Symantec reported strong second-quarter results on Wednesday, but cut its third-quarter outlook.

"Like many other companies, we saw a pause in IT spending [during] the last week of the quarter," said chief executive John Thompson on a conference call.

The security-software vendor said on Wednesday that its third-quarter earnings would be between 11 cents (7 pence) and 14 cents a share, or 30 to 33 cents a share excluding charges. Revenue for the quarter ending 2 January will between $1.45bn and $1.5bn, the company said. Wall Street was expecting earnings of 36 cents a share on revenue of $1.61bn.

Thompson noted that the "strengthening of the dollar also hurt our results". However, Symantec executives said that the company is well positioned to grab moremarket share as vendor relationships are consolidated.

Even so, Thompson said that customers are taking longer to decide on deals and consumer spending may be weak. When asked if Symantec was being too conservative, executives said it only made sense to cut the outlook.

Symantec's outlook overshadowed a strong second quarter. The company reported net income of $140m, or 16 cents a share, for the second quarter, ending 3 October. Excluding charges, the company reported earnings of 37 cents a share, two cents better than estimates.

Revenue in the second quarter was up seven percent from a year ago, to $1.52bn.

International revenue accounted for 50 percent of the total in the second quarter.

Of Symantec's total revenue, Europe, Middle East and Africa accounted for 32 percent; Asia-Pacific/Japan accounted for 14 percent; and the Americas accounted for 54 percent.

Symantec's storage and server-management business accounted for 38 percent of revenue, with the consumer business representing 29 percent. The security and compliance business was 26 percent of the total, with services accounting for seven percent.

Symantec signed 326 agreements, compared to 302 a year ago. Of those deals, 77 topped $1m.

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