Quarterly non-GAAP revenue came in shy of the analysts’ consensus estimate of $1.29bn, at $1.28bn, growing from $1.06bn a year ago. GAAP revenue was $1.26bn. The company earned $0.26 per share before certain items, a penny short of the analysts’ best guess.
Chief executive John Thompson told Wall Street analysts that the weakness was mainly in Europe’s central region, namely Germany, and hinted that Symantec’s size may have had something to with it.
Our European team has lost its security swagger, he said. They’ve not quite figured out how to embrace the totality of what we have in now in our portfolio and take those product off to the marketplace in the same manner as we have been in other parts of the world.
Germany is suffering from its own set of economic woes, and we have our own set of issues there because we’ve chosen to make leadership changes because of our dissatisfaction, quite frankly, with the way that part of our business has been performing, Thompson said.
The consumer business represented 31% of revenue and grew 12%. The enterprise business, which includes security, the old Veritas storage management software, and the Symantec services business, accounted for the remaining 69%, and grew 5%.
Thompson attributed the weaker enterprise growth not just to execution problems in Europe, but also to the increasing commoditization of the core security businesses upon which Symantec has built its company.
It’s clear we’ve seen in the security space for more well-established firms lower growth rates over last several quarter to a year, he said. In the segments of security where we have the largest portion of our revenue – that is antivirus and content filtering – it’s clear that unit volumes are relatively flat to down slightly and that price points continue to follow season or annualized pattern of erosion.
It other words, Symantec is not selling as much antivirus software as it once did, and what it is selling it is selling for generally lower prices. Instead, the company is making plays into the compliance space, where managing security states is more important than catching viruses.
If you don’t have a rise in volumes and have normalized price erosion, you’re going to see lower yield, so our investments have been focused on moving the needle into compliance and moving into technologies that are more about data leakage and new areas for customers, and that’s where’s we’ll get the revenue lift, he said.
