Symantec Corporation (NASDAQ: SYMC), known by many as the producer of the Norton anti-virus program, specializes in providing information security and storage products. Symantec helps its customers, which range from large enterprises to individuals, to protect their systems and data by delivering software and services that address risks to information security and system performance. The Company's delivery network consists of 40,000 partners worldwide, and includes relationships with original equipment manufacturers (OEMs), Internet service providers (ISPs), and retail and online stores.
Symantec faces intensifying competition from a number of new market entrants, including Cisco Systems, Juniper Networks and Microsoft. While Symantec has head start, the increased competition will undoubtedly drive down prices.
First Quarter 2010 Results
Symantec reported GAAP revenue for the fiscal fourth quarter was $1.531 billion. Non-GAAP revenue was $1.535 billion, up 3 percent over the comparable period a year ago (flat after adjusting for currency). GAAP operating margin for the fourth quarter of fiscal year 2010 was 16.1 percent. GAAP net income for the fiscal fourth quarter was $184 million compared with a net loss of $264 million for the same quarter last year. GAAP diluted earnings per share were $0.23 compared with a loss per share of $0.32 for the same quarter last year. Sales activity during the quarter continued to improve as Symantec took advantage of cross-selling and up-selling opportunities
Symantec's Consumer segment provides suites and services that include Internet security, PC tuneup, and backup for individual users and home offices. The Norton brand of consumer security software products provides protection for Windows, Macintosh, Windows-Mobile, and Symbian platforms.
New customer acquisition is driven by increased threats, the need for identity protection, the growth of online transactions and the rapid increase of consumer data, such as photos, music libraries and video.
With the acquisition of PC Tools, Symantec reaches more segments, such as emerging markets, price sensitive consumers and new e-commerce channels. Norton retains and leverages its strong existing customer base through auto-renewal subscriptions, migrating customers from point products to multi-product suites such as Norton Internet Security and Norton 360 and selling them additional products or services such as NortonLive services or the new Norton Online Backup. Through Norton 360, various partnerships and online channels, Symantec is the market leader for online backup. Symantec hosts over 30 petabytes of consumers’ data and has more than 7 million customers.
Symantec's Security and Compliance segment helps customers standardize, automate and reduce the costs of day-to-day security activities in order to secure and manage their information. Symantec's primary solutions in this segment address the following areas:
Enterprise security customer demand is driven by the quickly evolving threat environment, compliance regulations, and the need to keep confidential information from exposure outside the organization. Symantec's solutions are built on market-leading policy management, data loss prevention, endpoint security, antispam, and content filtering technologies, allowing IT professionals to proactively mitigate information security risks and policy violations.
Symantec's Endpoint Management business consisting of systems management products is driven by the need for automated asset management, patch management and remediation. Symantec's solutions offer better visibility into IT assets, simplified day-to-day manageability and improved end-user productivity, helping customers realize cost savings and value from their existing IT investments. Another key demand driver is endpoint virtualization, which frees up critical information from operating system functions and devices so it can be secured and managed.
Growth in Symantec's archiving business is driven by increased e-discovery requirements and the growth of unstructured data such as email and instant messaging. Symantec Enterprise Vault optimizes storage by reducing expensive long-term storage of this data in an easy to access format.
Symantec's Storage and Server Management segment focuses on providing enterprise customers with storage management, high availability, and backup and recovery solutions across heterogeneous storage and server platforms. These solutions enable companies to standardize on a single layer of infrastructure software that works on every major distributed operating system and supports every major storage device, database, and application. Symantec's primary storage and server management solutions address the following areas:
Storage Management and High Availability
Symantec's Storage Management and High Availability business is driven by our customers’ need to reduce overall storage costs through improved utilization of existing systems and virtualization. The business is also driven by customer migration to x86 based servers, which provides a reliance on management and availability tools to manage complexity and provide business continuity. Symantec's products help customers simplify their data centers by standardizing storage management across their environment for more efficient use of their existing storage investment.
Backup and Recovery
Growth in the backup and recovery business is driven by migration from tape to disk-based backup, support for virtualization, de-duplication, and continuous data protection.
Symantec Global Services help customers address information security, availability, storage, and compliance challenges at the endpoint and in complex, multi-vendor data center environments. Symantec's Services segment delivers Consulting, Education and Business Critical Services that help our customers maximize the value of their investment in Symantec's products and solutions. Managed Services and SaaS offerings provide customers the additional choice of on-demand services to meet their IT requirements.
Consulting, Education and Business Critical Services
Symantec Consulting provides advisory, product enablement and residency services to enable customers to assess, design, transform and operate their infrastructure, leveraging Symantec products and solutions. Education Services provides a full range of programs, including technical training and security awareness training, to help customers optimize their Symantec solutions. Business Critical Services, Symantec's highest level of support, provides personalized, proactive support from technical experts for enterprises that require secure, uninterrupted access to their data and applications.
Managed Services and SaaS
Symantec Managed Services and SaaS offerings enable customers to place resource-intensive IT operations under the management of experienced Symantec specialists in order to optimize existing resources and focus on strategic IT projects. This helps customers by reducing IT complexity, managing IT risk, and lowering the cost of operations. Recently acquired SaaS offerings from MessageLabs, combined with Symantec Protection Network backup and recovery offerings provide customers the flexibility to manage their business using online services or hybrid onsite and in-the-cloud solutions. These services include Symantec Managed Security Services, Symantec Managed Backup and MessageLabs Email Security Solutions.
Symantec faces increased competition from both startups and large established corporations such as Cisco Systems, Juniper Networks (JNPR) and Microsoft (MSFT). The latter entered the consumer anti-virus industry in mid 2006 after acquiring Giant Software and GeCad two anti-virus/spyware protection companies. Its new product, OneCare, includes a firewall, data backup software, anti-virus, and spam protection all in one. Given the popularity of the Windows operating system, Microsoft could pose a significant threat to Symantec, as the former continues to improve its offering. Even if Microsoft doesn't displace Symantec, the entrance of such a large competitor into the market could lead to significant price competition.
People are leading increasingly digital lifestyles. The PC is at once a means of communicating (email, Skype, etc.), a source of entertainment (music, videos), and even a store of valuable personal memories (photos). Not surprisingly, as the role of the PC has evolved over time, so has the demand for security and storage products. Consumers, are increasingly interested in bundled security (PC and internet) and information storage to protect valuable information. Symantec's acquisition of Veritas along with the company's longstanding expertise in internet and PC security, leaves it well positioned to respond to this change in consumer demand.
The market for spyware protection is growing faster than the anti-virus market, and companies like Webroot Software, Yahoo, and Microsoft have an early lead. Companies like Cisco Systems and IBM offer higher-value security solutions that will capture the majority of enterprise spending on security. Other competitors include McAfee, Trend Micro, CA, Inc., EMC Corporation (EMC), CommVault Systems, Inc. and VeriSign. Symantec, continues to dominate the consumer anti-virus sector, with over 64% market share, more than 3x as much as McAfee, its nearest competitor.
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