This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Don't Give Up on Symantec

Symantec is targeting organic revenue growth of more than 5% and adjusted operating margin of 30% by fiscal year 2017. In these terms, Symantec has given mixed signals. While on one hand, Symantec has improved its profitability, on the other hand, it has achieved little in terms of top-line growth.

Over the last two quarters, Symantec's revenue have fallen. Thomson Reuters reports analysts are expecting an even bigger year-over-year drop of 6% in the fourth quarter. The company could post annual revenues of $6.69 billion, which would show a decline of 3.1% from last year. This annual estimate is in-line with Symantec's forecast.

On the other hand, in the third quarter Symantec's operating margins rose to 23.8% from an average operating margin of just 16.1% in the fiscal third quarters over the last three years. The company's profit margin came in at 16.6%, which is the highest for the fiscal third quarter since 2009.

Moreover, Symantec's adjusted operating margin climbed 420 basis points from the same quarter last year to 30.1%, which is in line with its 2017 target.

In the previous quarter, Bennett was able to rein in the company's operating expenses, which dropped by 14% from 2013, on the back of the massive job cuts.

While Bennett is delivering on the promise of reducing the firm's operating expenditure, the pace of the decline was slower than Bennett's initial plans. The CEO was targeting at least a $220 million reduction in annual operating expenses. By that measure, in the first nine months of the current fiscal year, the operating expenses should have fallen by $165 million. They are down by just $133 million, easily missing the mark by nearly $30 million.

However, it will deliver on Bennett's promise if, in its next quarterly results for the three months ending March 2014, Symantec manages to cut its operating expenses by just 7.4%.

In these terms, Bennett's performance wasn't all bad -- therefore his layoff in the middle of the turnaround came as a big shock to investors. This is why Symantec's shares are still down 2.7% since the announcement of Bennett's departure. Furthermore, the seven analyst downgrades have further exacerbated the situation.

Despite all its troubles, Symantec is the biggest security software vendor in the world. According to Gartner, the security infrastructure market could continue growing from $55 billion in 2011 to $86 billion by 2016. This growth could fuel Symantec's turnaround.

Symantec is facing increasing competition from Palo Alto Network (PANW) and FireEye (FEYE), as well as from McAfee, which is backed by the tech juggernaut Intel (INTC). But, according to Gartner's most recent data, Symantec commands a massive 19.6% market share in the security software industry. The company's share is more than twice as large as that of its nearest competitor, McAfee.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,055.87 -116.81 -0.68%
S&P 500 1,982.77 -11.52 -0.58%
NASDAQ 4,508.6880 -19.0010 -0.42%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs