Symantec (SYMC)

Q1 2011 Earnings Call

July 28, 2010 5:00 pm ET

Executives

Enrique Salem - Chief Executive Officer, President and Director

James Beer - Chief Financial Officer and Executive Vice President

Helyn Corcos - Vice President of Investors Relations

Analysts

Adam Holt - Morgan Stanley

Katherine Egbert - Jefferies & Company, Inc.

Brent Thill - UBS Investment Bank

John DiFucci - JP Morgan Chase & Co

Neil Herman - Soleil Securities Group, Inc.

Shaul Eyal - Oppenheimer & Co. Inc.

Philip Winslow - Crédit Suisse AG

Edward Maguire - Credit Agricole Securities (USA) Inc.

Philip Rueppel - Wells Fargo Securities, LLC

Daniel Ives - FBR Capital Markets & Co.

Rob Owens - Pacific Crest Securities, Inc.

Todd Raker - Deutsche Bank AG

Richard Williams - Cross Research

Ventsi Stoichev

Presentation

Operator

Good day, and welcome to Symantec's First Quarter 2011 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the call over to Miss Helyn Corcos. Please go ahead.

Helyn Corcos

Good afternoon and thank you for joining our call to discuss fiscal first quarter 2011 financial results. With me today are Enrique Salem, Symantec's President and CEO; and James Beer, Symantec's Executive Vice President and Chief Financial Officer.

In a moment, I will turn the call over to Enrique. He will discuss how Symantec executed during the quarter. Then James will provide highlights of our financial results as well as discuss our guidance assumptions as outlined in the press release. This will be followed by a question-and-answer session.

Today's call is being recorded and will be available for replay on Symantec's Investor Relations website at www.symantec.com /invest. A copy of today's press release and supplemental financial information are posted on our website and a copy of today's prepared remarks will be available on our Investor Relations website shortly after the call is completed.

Before we begin, I'd like to remind you that we will review our financial results focusing on year-over-year constant currency growth rates unless otherwise stated. Sequential growth rates are based on as reported results. For June 2010 quarter, the actual weighted average exchange rate was $1.26 per euro and the end-of-period rate was also $1.26 per euro, compared to our guided rate of $1.35 per euro. For the June 2009 quarter, the actual weighted average rate was $1.37 per euro, and the end-of-period rate was $1.40 per euro. We've included a summary of the year-over-year constant currency and actual growth rates in our press release table and in our supplemental information.

As a reminder, we will provide a currency update following the end of each quarter. This will be posted on our website's quarterly results section. Given the rapidly fluctuating exchange environment, we encourage everyone to apply our rules of thumb as a guide to estimating the impact of currency fluctuations on our financial metrics once the quarter has ended.

Moving on. Some of the information discussed on this call, including our projections regarding revenue, operating results, deferred revenue, cash flow from operations, amortization of acquisition-related intangibles and stock-based compensation for the coming quarter, contain forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in statement. Additional information concerning these risks and uncertainties can be found in the company's most recent periodic reports filed with the U.S. Securities and Exchange Commission. Symantec assumes no obligation to update any forward-looking statements.

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Symantec reports non-GAAP financial metrics. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found in the press release and on our website.

And now I would like to introduce our CEO, Mr. Enrique Salem.

Enrique Salem

Thank you, Helyn, and good afternoon, everyone. I'd like to start off by highlighting our key priorities for fiscal 2011. These priorities are: extending beyond the PC in consumer security, growing license sales, expanding the adoption of our SaaS offerings and simplifying the customer and partner experience. While we made progress in some of these areas during the June quarter, a number of enterprise deals slipped due to a longer than expected customer procurement cycles driven by continued cautiousness among IT buyers. In particular, this affected our Storage Management results. With that said, we are confident that these deals have not been lost to competitors, as in fact, we have closed many of them in July.

Having said that, highlights for the quarter included strong results in our Public Sector business and continued strength in DLP and SaaS. In addition, we are beginning to reap the rewards of our new backup solutions and are pleased with the steady growth in the Consumer business. The integration of PGP and GuardianEdge is off to a great start with customers excited with the addition of new encryption offerings to our portfolio.

We’re pleased with the year-over-year growth in public sector deals for state, local and federal governments. We signed a multi-year contract with the U.S. Marine Corps who chose to use NetBackup with their Enterprise IT Services program. In addition, SESCAM, a Public Health Care Department in Spain, signed a multi-year contract spanning across our Endpoint Security, backup storage and service offerings.

Our recent acquisition of GuardianEdge is resonating well within the government sector due to the adoption of standards-based solutions and increased regulatory encryption requirements. This positions us well for the federal government fiscal year and in September.

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