Symantec Faces McAfee Challenge

Investors will look to see whether security software specialist Symantec has lost market share to rival McAfee and others.
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CUPERTINO, CALIF. (

TheStreet

) -- Investors will be eagerly awaiting

Symantec's

(SYMC) - Get Report

first-quarter results late Wednesday for signs of heightened

competition

in the security software market.

The Cupertino, Calif.-based firm, which competes with

McAfee

(MFE)

,

Microsoft

(MSFT) - Get Report

and

ArcSight

(ARST)

, reports its first-quarter numbers after market close.

At least one analyst expects to see Symantec lose market share, particularly in its larger customer accounts.

"In the backdrop of a weak economy, spending on security and compliance still appears soft," wrote Katherine Egbert, an analyst at Jefferies & Company, in a note released earlier this week. "We think intense competition from McAfee on larger deals could further the top-line pressure."

Analysts surveyed by Thomson Reuters expect Symantec to post revenue of $1.49 billion and earnings of 35 cents a share.

Despite recording record revenue in fiscal 2009, Symantec saw its consumer business decline 1% year-over-year. The security specialist also missed Wall Street's

fourth-quarter

revenue forecast, underlining the

challenges

facing the

software sector

.

Jefferies & Company's Egbert nonetheless expects that server and storage management software will boost Symantec's first-quarter revenue, even if sales of security and compliance offerings are weak.

"Storage and server remains a bright spot for the company," she wrote, forecasting revenue of $542 million, above analysts' prediction of $538 million.

Investors will also be looking for more details on Symantec's product strategy when it releases its results. Fall typically marks the launch of new software products, and the Cupertino, Calif.-based firm is planning

enhancements

to its Norton products.

The company has also vowed to bring in more revenue through

Software-as-a-Service (SaaS)

in areas such as archiving, Web security, endpoint management, and data loss prevention.

Long-term, the company is also expected to

reap

the

benefits

of President Obama's ambitious IT agenda.

Obama recently unveiled his cyber-security

master plan

, which aims to make the U.S. less vulnerable to online threats. Key recommendations include appointing a cyber-security "czar," forging closer ties between the federal government and the private sector, and responding more effectively to cyber attacks.

Cyber-security has also been in the media spotlight recently thanks to the

denial-of-service

attack that recently hammered Web sites in the U.S. and South Korea.

Symantec and

McAfee

, however, will soon be confronted with a very different competitive landscape. Later this year, Microsoft will offer Security Essentials, a

free

consumer anti-virus product -- a major departure in a market driven by software subscriptions.

"I would imagine that there will be some sleepless nights at McAfee and Symantec because Microsoft has amazing brand recognition," Graham Cluley, senior technology consultant for U.K.-based cyber security specialist

Sophos

, recently told

TheStreet.com

. "In my mind, Microsoft coming out with free anti-virus software is very good because it cleans up more computers."

Shares of Symantec fell 0.3% to $17.15 Wednesday, while the Nasdaq fell 1%.