Symantec Shares Tumble on Weak Outlook

Shares of Symantec (SYMC Quote) tumbled more than 15% in trading Thursday after it said sales could be sluggish in the current quarter because of the slowdown in the global economy.

The stock fell $2.34, or 15.83%, to $12.47, well below their 52-week high of $22.80, after it posted mixed second-quarter results Wednesday.

While the company's second-quarter profits almost triple on strong sales of storage and server management software, its company's security software business was sluggish.

Security software has traditionally been seen as a necessity for companies, even in tough economic times, but the company's second-quarter results suggest that this may be changing.

Growth in Symantec's security and compliance software division slowed significantly in the second quarter as revenues rose just 2% compared to the same period last year. By contrast, sales of the company's security and compliance software grew 12% year over year in the first quarter of 2008.

Symantec executives blamed "the uncertain economic environment" for the retail slowdown during a conference call late Wednesday.

Chief Operating Officer Enrique Salem said that although sales of security software to large enterprises were strong in the second quarter, demand from mid-sized companies was not. "My sense is right now that [the mid-market] is more impacted by some of the things going on in the macro- environment," he said.

"Symantec's quarter clearly raises a question of whether security (software) is starting to experience increased pressure," wrote Todd Weller, an analyst at Stiefel Nicolaus, in a note released Thursday, adding that security software is clearly not immune to the tech spending slowdown.