Should I Do It? Symantec Bar Set Low
Symantec (SYMC), best known for its Norton antivirus software, has seen its shares drop like a stone in 2007.
At Tuesday's closing price of $17.62, the stock is already down a quick 15.5% for the new year, as management hit investors with a disappointing fiscal third quarter (ended December) report Jan. 24.
The company also said Monday that it's buying systems management software producer Altiris (ATRS) for $1.03 billion. While Symantec believes the purchase will be slightly accretive to fiscal 2008 (ending March) earnings, investors aren't soon to forget that the stock is down 19.4% since the company paid $10.2 billion for Veritas Software (VRTS) in 2005.
Symantec is currently on track to see profits decline in fiscal 2007 for the first time in five years, to 96 cents a share. Even so, at 18.4 times full-year earnings, the company trades at a 43% discount to its historical average and a 14% discount to top competitor McAfee (MFE).With that in mind, I'm here to answer investors' questions: Should I do it? Has Symantec dug itself a new hole with this acquisition, or has the stock already sold off too much? The consumer security business still accounts for 30% of the company's business and grew 24% year over year in the latest quarter. But to keep up with declining storage sales, Symantec said last week that it will cut 5% of its workforce and reduce annual expenses by $200 million. Management also pledged to buy back $1 billion (57 million shares) of its stock over time. Even after the Altiris purchase, Symantec still has $2.2 billion ($2.30 a share) of cash on the balance sheet.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV