Symantec Easily Beats Estimates, Raises '03 Guidance - TheStreet

Updated from 5:35 p.m. EDT

Security software company


(SYMC) - Get Report

reported fourth-quarter results Wednesday that widely beat Wall Street estimates and full-year revenue that topped $1 billion.

The Cupertino, Calif., company, maker of the Norton Antivirus software, provided guidance for the first quarter in line with Wall Street estimates and raised guidance for fiscal year 2003.

Symantec reported fourth-quarter net income of $4.78 million, or 3 cents a share, compared with a net loss of $27.45 million, or 18 cents a share, a year earlier. Revenue in the fourth quarter, which ended March 29, totaled $310.78 million, up 24% from the same period a year ago. Revenue rose 7% sequentially.

On a pro forma basis, Symantec earned $65.1 million, or 41 cents a share, in the fourth quarter, compared with $48.18 million, or 31 cents a share, a year earlier. Wall Street was expecting the company to earn 35 cents a share on $289.7 million in revenue in the fourth quarter, according to Thomson Financial/First Call.

For the fiscal full-year 2002, Symantec reported a net loss of 20 cents a share on $1.07 billion in revenue. That compares with earnings of 47 cents a share on $944.15 million in revenue last year. On a pro forma basis, the company earned $1.30 a share, compared with $1.17 a share in fiscal year 2001. Wall Street was expecting the company to earn $1.24 a share on $1.05 billion in revenue.

On a postclose conference call, CFO Greg Myers said Symantec expects to earn 32 cents a share in the fiscal first quarter ending in June -- in line with Wall Street estimates. The company expects revenue to range from $280 million to $290 million, just shy of the consensus estimate of $292.8 million.

For fiscal year 2003, Myers said the company expects to post a pro forma profit of $1.42 a share. That's higher than the $1.40 forecast by the company earlier this year but in line with the Wall Street consensus. The company said fiscal year 2003 revenue will range from $1.22 billion to $1.25 billion, with the high end raised from previous guidance of $1.24 billion. Analysts were expecting the company to report $1.22 billion in revenue in fiscal year 2003.

"Overall it

the quarter is solid on the surface," said Todd Weller, an analyst with Legg Mason. But "our contention is that the upside in the consumer business is great, but it's not sustainable and it's not what you're getting a high multiple for." Weller has a buy rating on the stock, and his firm hasn't done any banking business with Symantec.

Symantec said expansion into the enterprise business market fueled its strong results. The enterprise business grew by more than 29% during the fiscal year to make up more than 43% of total sales. CEO John Thompson called fiscal year 2002 "a damn good year" in a tough global economy.

But on closer inspection, the consumer market was also a big growth driver and Symantec's enterprise line was weaker in the fourth quarter than in previous quarters, Weller pointed out. Symantec said fourth-quarter enterprise revenue rose 19% year over year, but Weller noted that enterprise sales declined sequentially to $121 million from $127 million in the third quarter. In addition, that 19% annual growth in the fourth quarter marked a slowdown from the 44% annual rate experienced in the December quarter and 34% annual growth rate in the September quarter, he said.

With revenue of about $126 million, the consumer business exceeded Weller's forecast of $100 million for the fourth quarter. But the consumer market is considered mature, and even Thompson acknowledged on the conference call that its growth is not sustainable.

Shares of Symantec fell 58 cents, or 1.7%, to close at $34.65. After the company announced its results Symantec's shares were the volume leader on Instinet, rising 6.8% to $37 in after-hours trading.