Top Line Light at Symantec

But revenue still grows 26% for the quarter.
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Updated from 6:21 p.m. EDT

Symantec

(SYMC) - Get Report

posted a 26% gain in revenue in the first quarter and boosted non-GAAP earnings by 50%, the company said after Thursday's closing bell.

But the company's outlook for the September quarter, the first period to reflect the combined operations with Veritas, appeared well below expectations and the stock quickly lost $1.34 a share, or nearly 6% after hours." "On the face of it, we see a significant miss," said analyst Richard Williams of Garban Institutional Equities. "But we want to verify that because of the complexity of the company forecast."

Net income for the fiscal first quarter was $119 million, or 27 cents a share, compared with $117 million, or 16 cents a share, for the same quarter last year. Revenue was a record $700 million, compared with $557 million in 2004.

Analysts polled by Thomson First Call were looking for a 27-cent-a-share profit on revenue of $712 million.

Consumer and enterprise revenue were almost evenly divided in the latest quarter. Sales to consumers totaled $357 million, up 28% in what the company said was a historically slow quarter due to seasonality.

Enterprise sales grew by 23% to $343 million. Within that category, most of the revenue was derived from enterprise security sales, which grew 26% to $266 million.

For the company as a whole, international revenue was $354 million, up 27%, and accounted for 51% of the quarter's revenue. U.S. revenue for the quarter was $346 million, up 25%.

Since Symantec's controversial $10.5 billion acquisition of Veritas closed on July 2, shares in the Silicon Valley-based antivirus maker had

gained about 10% before Thursday's announcement. Although that's not an enormous move, it's worth remembering that the stock lost about 26% of its value within weeks after news of the merger leaked out in December.

Most analysts were focused on guidance for the next quarter, and it appears that a strengthening dollar, a shift to a ratable model for the company's consumer business pushed the company's forecast for the second quarter -- and fiscal 2006 -- below consensus.

The company expects to earn 20 cents a share on a non-GAAP basis in the September quarter on sales of $1.18 billion. Wall Street was looking for a 24-cent-a-share profit on revenue of $1.29 billion.

For the fiscal year ending in March, the company expects to earn a non-GAAP profit of 99 cents on sales of $5.13 billion. That compares to expectations of a $1.05-a-share profit and revenue of $5.64 billion.

CFO Greg Myers said that the company's anticipated bottom line includes a 6-cent hit due to the stronger-than-expected dollar and another 3 cents due to the change to the ratable consumer model, which pulls revenue off of the income statement and onto the balance sheet's deferred revenue line.