Q3 results for Symantec, the global provider of information management and security products, showed somewhat of a recovery from disappointing Q2 figures (see Symantec stumbles at 2Q hurdle). Revenue was still down on the previous year, again by 4% (adjusted for FX) but operating margin was up 33% for the quarter and 3% for the nine months. Non-GAAP eps rose 13% in the quarter. 3Q figures were helped by lower restructuring costs, down $90m from the Q2 level.
The two largest divisions reported revenue declines, with User Productivity and Protection (42% of sales) down 4% and Information Management (39%) down 6%. Business outside the US also fell by 4%, with Asia-Pac/Japan (17% of sales) down 12%.
The management state they are pleased with the progress of their 3-5 year transformation which has seen changes in portfolio, sales teams and management structure. Symantec has also retreated from marginal areas (see Symantec dropping Backup Exec. Cloud). Nonetheless we are not yet convinced that Symantec’s strategy is getting to terms with the seismic shifts in the industry with the growth of cloud and consequent emergence of new competitors, the growth of mobile and importantly for Symantec, the rapid decline of PC sales.
The management are not inspiring much confidence that they are in control. After 2Q figures they lowered guidance for the full year and then after these latest results they made a further revision, this time predicting eps growth, the guidance shifting by a relatively large 170 basis points. At least this revision is in the right direction.
Symantec has a strong market position and portfolio and is changing its business to meet the modern reality. However, the jury is still out as to how successful the current plans will be in generating long term value.