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Symantec to Sidestep Spending Worries

Stocks in this article: SYMC WBSN

MOUNTAIN VIEW, Calif. ( TheStreet -- Security specialist Symantec (SYMC) could sidestep the effects of the IT spending slowdown when it reports its second-quarter results on Wednesday after market close.

"Our research suggests IT spending is slowly deteriorating, though we contend security is amongst the least discretionary spending categories," noted Brad Zelnick, an analyst at Macquarie Capital, in a recent note. "Security and storage appear to have been prioritized," he added.

Symantec CEO Enrique Salem.

Recent results from other security and storage players certainly point to robust demand in these areas. On Tuesday, for example, Internet security firm Websense (WBSN) reported record revenue in its third-quarter results, while storage giant EMC (EMC) posted impressive numbers last week.

Symantec, which sells both security and storage software, will be looking to tap these trends when it reports its own results. Analysts surveyed by Thomson Reuters are looking for the company to post revenue of $1.66 billion and earnings of 39 cents a share, compared to $1.48 billion and 34 cents a share in the same period last year.

The software maker expects revenue between $1.655 billion and $1.675 billion and earnings between 38 cents a share and 39 cents a share.

During its fiscal first quarter, Symantec cited strength in storage backup, as well as its data loss prevention and consumer products. The company's security numbers were also boosted by a spate of headline-grabbing attacks that targeted the likes of defense contractor Lockheed Martin (LMT), Sony (SNE) and Citigroup (C), which refocused enterprise attention on cyber security.

A recent survey of global companies conducted by Symantec showed that 21% saw an increase in cyber attacks. Last month, Symantec CEO Enrique Salem also cited growing cyber security spending during an appearance on CNBC's 'Fast Money' show.

Salem also noted that there have been attacks on critical infrastructure such as the country's power grid or financial infrastructure. The company, he added, has exceeded Street estimates the past four quarters.

Macquarie's Zelnick, however, warns that Symantec's third-quarter guidance could feel the strain of a tough economy. "Despite the defensive nature of security software, we expect global macro uncertainty and a stronger U.S. dollar to temper December quarter outlook," he explained.

Symantec shares, which have risen more than 14% this year, were down 42 cents, or 2.26%, at $18.13 on Thursday.

--Written by James Rogers in New York

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