Symantec Reports Solid Second Quarter Results

Symantec Corp. (Nasdaq: SYMC) reported the results of its second quarter of fiscal year 2008, ended Sept. 28, 2007. GAAP revenue for the quarter was $1.42 billion and non-GAAP revenue was $1.44 billion. Non-GAAP revenue, including revenue from the Altiris acquisition, grew 13 percent over the comparable period a year ago.

GAAP deferred revenue at the end of the September 2007 quarter was $2.60 billion, compared to $2.33 billion at the end of the September 2006 quarter. Non-GAAP deferred revenue at the end of the quarter reached $2.62 billion, up 12 percent compared to $2.35 billion at the end of the September 2006 quarter.

Cash flow from operating activities for the September 2007 quarter was $331 million, up 20 percent compared to $277 million for the September 2006 quarter.

GAAP Results: GAAP net income for the September 2007 quarter was $50 million, compared to $126 million in the September 2006 quarter. Diluted earnings per share of $0.06 compared to earnings per share of $0.13 for the same quarter last year. The earnings per share result includes a write-down of $87 million associated with non-strategic Data Center Management assets.

Non-GAAP Results:

Non-GAAP net income for the September 2007 quarter was $263 million, compared to $261 million for the same quarter last year. Non-GAAP diluted earnings per share were $0.29, up 11 percent compared to diluted earnings per share of $0.26 for the same quarter last year. For a detailed reconciliation of our GAAP to non-GAAP results, please refer to the condensed consolidated financial statements below.

“With strong demand for a number of our emerging enterprise technology solutions and improving business operations, our team delivered a solid quarter,” said John W. Thompson, chairman and chief executive officer, Symantec. “Core business areas like our consumer business and our Windows-based backup solutions had strong results, which contributed to healthy cash flow performance this quarter.”

Financial Highlights

For the quarter, Symantec’s Consumer segment represented 30 percent of total non-GAAP revenue and grew 10 percent year-over-year. The Security and Data Management segment represented 30 percent of total revenue and grew 7 percent year-over-year. The Data Center Management segment represented 28 percent of total revenue and grew 7 percent year-over-year. Services represented 6 percent of total revenue and grew 30 percent year-over-year. The Altiris segment includes revenues from the acquisition of Altiris and Symantec’s Ghost, pcAnywhere and LiveState Delivery solutions, and represented 6 percent of total revenue.

International revenues represented 51 percent of total non-GAAP revenue in the September 2007 quarter and grew 15 percent year-over-year. The Europe, Middle East and Africa region represented 32 percent of total revenue for the quarter and grew 20 percent year-over-year. The Asia Pacific/Japan revenue for the quarter represented 14 percent of total revenue and grew 9 percent year-over-year. The Americas, including the United States, Latin America and Canada, represented 54 percent of total revenue and increased 10 percent year-over-year.

December Quarter 2007 Guidance

For the December 2007 quarter, GAAP revenue is estimated between $1.41 billion and $1.45 billion. GAAP diluted earnings per share are estimated between $0.06 and $0.11.

Non-GAAP revenue for the December 2007 quarter is estimated between $1.425 billion and $1.465 billion. Non-GAAP diluted earnings per share are estimated between $0.25 and $0.30.

GAAP deferred revenue is expected to be in the range of $2.635 billion and $2.785 billion. Non-GAAP deferred revenue is expected to be in the range of $2.65 billion and $2.80 billion.

For the December 2007 quarter, we expect cash flow from operating activities to be below the December 2006 quarter cash flow from operating activities of $454 million.

Quarterly Highlights


Symantec signed 302 contracts worldwide versus 292 contracts in the same period a year ago worth more than $300,000 each. Sixty-four contracts were worth more than $1 million each versus 67 contracts in the same period a year ago. In the September 2007 quarter, more than 75 percent of our large deals were multiple product deals.
In North America, Symantec signed new or extended agreements with customers including East Tennessee State University, a regional public university serving more than 13,000 students; US Airways, the fifth largest domestic airline employing more than 36,000 aviation professionals worldwide; Texas Children’s Hospital, an internationally recognized full-care pediatric hospital located in the Texas Medical Center in Houston; Pittsburgh Public Schools, serving 29,447 students in 65 schools; GCI, which provides residential and business telecommunications services to residents of Alaska; and The California Department of Transportation, managing more than 45,000 freeway miles and more within the state of California.
International customers from the quarter included Contax S.A., a leading Brazilian provider of telephone, e-mail, postal, and Internet contact services; Pearson, an international media company with world-leading businesses in education, business information and consumer publishing; GS Home Shopping, the leader in Korea’s home shopping industry; AMS, the Swedish National Labor Market Administration; AC Hotels, the Spanish hotel chain; and The London Stock Exchange.