Symantec Erases Doubts With Solid Quarter

SAN FRANCISCO -- After a few false starts, IT security giant SymantecSYMC is finally hitting its stride although it may not be entirely out of the woods.

After having disappointed investors in the past, Symantec posted strong fourth-quarter earnings Wednesday and offered a robust outlook that sent the company's stock soaring by nearly 10%.

Symantec's cheery guidance helped allay concerns that the economic slowdown could have a negative effect on IT spending and take a toll on the company's sales. The results also puts Symantec in a position as a defensive stock in a challenging economic environment as companies are unlikely to scale back on spending in IT security, compliance and information storage, industry experts say.

But Symantec still faces some big challenges. For example, analysts say the company is seeing slow growth in its bookings, an indication of future demand for its products, and its enterprise security business is underperforming that of rival McAfeeMFE. Meanwhile, smaller private companies such as Sophos have been stealing some of Symantec's biggest customers.

For investors, though, Wednesday's earnings report is good news because Symantec has proved that its efforts to integrate its 2005 purchase of storage company Veritas is paying off and that the company can consistently beat expectations.

"The combination of strong product cycle and better execution is the long awaited two-in-one-punch that should help lift the stock significantly over the next few quarters," says Daniel Ives, an analyst with Friedman, Billings, Ramsey in a research note. Friedman, Billings, Ramsey makes a market in Symantec shares.