Symantec ( SYMC) is feeling the heat from disappointing third-quarter results, although the IT security giant beat revised estimates.

The company said Wednesday that it plans to reduce spending by about $200 million on an annualized basis in an effort to bring spending in line with revenue.

Revenue for the third quarter ended Dec. 29 was $1.32 billion, up 6% over the comparable period a year ago, and slightly higher than Symantec's lowered guidance of $1.29 billion to $1.31 billion.

Net income for the fiscal third quarter was $248 million vs. Street expectations of $249 million and compared with $282 million for the same quarter last year. EPS at 26 cents beat consensus expectations by a penny.

Shares of Symantec were recently up 41 cents, or 2.4%, to $17.89 in extended trading.

Deferred revenue at the end of the quarter reached $2.49 billion, up 25% compared with the December 2005 quarter. "This says market based activities are solid and the fundamentals of the business remain strong," said CEO John Thompson. "But there's a change in how we are working with our customers."

For the third quarter, Symantec's consumer business remained strong despite the threat from Microsoft's ( MSFT) consumer security product, Windows OneCare. Consumer business represented 31% of total revenue and grew 24% year over year.

Services represented 4% of total revenue and grew 8% year over year, while Security and Data Management business represented 39% of total revenue and grew 3% from a year ago.

The Data Center Management business disappointed, declining 8% year over year.

For the March 2007 quarter, revenue is estimated between $1.25 billion and $1.28 billion, with EPS forecast between 18 cents and 20 cents. Analysts are looking for revenue of $1.27 billion and earnings of 21 cents a share.

Feeling the pain will not just be consultants, but also contractors, whose services the company plans to reduce. On the chopping block will also be employees.

Symantec plans to reduce staff by a "modest" 5%, said Thompson. Symantec has more than 17,000 employees worldwide.

"There will be reduction in travel spending, new hires and we will be consolidating additional facilities," said Thompson.

Only a modest portion of the cost savings from this is likely to be reflected in the March quarter and will accelerate in fiscal 2008, starting in April.

Meanwhile, Symantec's board of directors have also approved an additional $1 billion share-buyback program, said Thompson.