CUPERTINO, Calif. – Jan. 24, 2007 – Symantec Corp. (Nasdaq: SYMC) today reported results for the third quarter of fiscal year 2007, ended Dec. 29, 2006. GAAP revenue for the quarter was $1.313 billion and non-GAAP revenue was $1.324 billion. Non-GAAP revenue grew 6 percent over the comparable period a year ago.
GAAP deferred revenue at the end of the December 2006 quarter was $2.46 billion. Non-GAAP deferred revenue at the end of the quarter reached $2.49 billion, growing 25 percent compared to the December 2005 quarter.
GAAP Results: GAAP net income for the fiscal third quarter was $114 million, compared to $91 million for the same quarter last year. Diluted earnings per share was $0.12 compared to $0.08 per share for the same quarter last year.
Non-GAAP Results:Non-GAAP net income for the fiscal third quarter was $248 million, compared to $282 million for the same quarter last year. Non-GAAP diluted earnings per share was $0.26 in both periods. For a detailed reconciliation of our GAAP to non-GAAP results, please refer to the attached consolidated financial statements.
“With a disappointing quarter behind us, we are moving to better align our costs with our new revenue expectations,” said John W. Thompson, Symantec chairman and chief executive officer. “I am confident that we have the right strategy in place; however, we must sharpen our execution.”
For the quarter, Symantec’s Consumer business represented 31 percent of total revenue and grew 24 percent year-over-year on a non-GAAP basis. Services represented 4 percent of total revenue and grew 8 percent year-over-year. The Security and Data Management business represented 39 percent of total revenue and grew 3 percent year-over-year. The Data Center Management business represented 26 percent of total revenue and declined 8 percent year-over-year.
International revenues represented 50 percent of total revenue in the third quarter and grew 7 percent year-over-year on a non-GAAP basis. The Asia Pacific/Japan revenue for the quarter represented 14 percent of total revenue and grew 11 percent year-over-year. The Americas, including the United States, Latin America, and Canada, represented 55 percent of total revenue and increased 5 percent year-over-year. The Europe, Middle East, and Africa region represented 31 percent of total revenue for the quarter and grew 5 percent year-over-year.
In order to align costs with new revenue expectations, Symantec plans to reduce its cost structure by $200 million. The company has identified a number of areas to achieve its target: reduce new hires; reduce contractor and consulting spending; reduce travel spending; consolidate additional facilities; and reduce the current workforce in certain business functions and geographies.
March Quarter and Fiscal Year 2007 Guidance
Symantec is reaffirming its revised guidance provided on Tuesday, Jan. 16, 2007. The impact of the cost-saving initiative is expected to be modest in the March 2007 quarter and has been taken into account in the guidance.
For the March 2007 quarter, GAAP revenue is estimated between $1.24 billion and $1.27 billion. GAAP diluted earnings per share for the March quarter is estimated between $0.04 and $0.06. For the fiscal year ending March 2007, GAAP revenue is estimated in the range of $5.08 billion to $5.11 billion. GAAP diluted earnings per share is estimated between $0.36 and $0.39. It is possible, however, that there will be a restructuring charge related to the cost savings efforts that would affect GAAP earnings for the March 2007 quarter.
Non-GAAP revenue for the March 2007 quarter is estimated between $1.25 billion and $1.28 billion. Non-GAAP diluted earnings per share is estimated between $0.18 and $0.20. For the fiscal year ending March 2007, non-GAAP revenue is estimated in the range of $5.13 billion to $5.16 billion. Non-GAAP diluted earnings per share is estimated between $0.92 and $0.95.
Deferred revenue is expected to be in the range of $2.60 billion and $2.65 billion. Cash flow from operations is expected to be of the order of $1.5 billion.
- Symantec signed 389 contracts worldwide worth more than $300,000 each, including 112 worth more than $1 million each, during the quarter. Of those 389 contracts, nearly 80 percent were multiple product deals.
- In North America, Symantec signed new or extended agreements with customers including Devon Energy Corp., one of the largest independent oil and gas producers and processors of natural gas and natural gas liquids in North America; Nortel, a global leader in delivering communications capabilities; Palm Inc., a leader in mobile computing; Savvis, Inc., global leader in IT infrastructure services for business applications; and United States Postal Service, which delivers 213 billion pieces of mail to more than 146 million homes, businesses and Post Office boxes in virtually every state, city, and town in the United States.
- New or extended agreements with international customers included Absa Group Limited, one of South Africa's largest financial services organizations; ANZ, a major Australian financial institution; Bank of Communications Co., Ltd, one of the famous commercial banks of China; Beijing Mobile and Hebei Mobile, subsidiaries of China Mobile Ltd., the leading mobile services provider in China; CTI Móvil, a subsidiary of América Móvil, S.A. de C.V., the leading provider of wireless services in Latin America with more than 115 million wireless subscribers as of October 2006; Fujian Telecom, a subsidiary of China Telecom Corporation Limited; HDFC, a leading Indian private sector bank with more than 400 branches and offices nationwide; KAZ, the largest Australian owned ICT company and a leading provider of managed IT services; Malam Communications, a specialist in a variety of IT solutions serving hundreds of customers in all sectors of economy; Mindware SA, a leading distributor of quality IT products to the Middle East and North Africa; Mobile Telephone Networks (MTN), a GSM cellular network operator delivering services in 21 countries in Africa and the Middle East; National Commodity & Derivatives Exchange Limited (NCDEX), a national-level, professionally managed, online commodity exchange; Rostelekom, Russia’s national long-distance telecom carrier; The Suncorp Group, one of Australia's leading banking, insurance, investment and superannuation organizations; and WIPRO Limited, the world's largest independent R&D Services Provider.
Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT today to discuss results from the fiscal third quarter, ended Dec. 29, 2006, and to review guidance for the fiscal year 2007. Interested parties may access the conference call on the Internet at http://www.symantec.com/invest/index.html. To listen to the live call, please go to the Web site at least 15 minutes early to register, download, and install any necessary audio software. A replay and script of our officers’ remarks will be available on the investor relations’ home page shortly after the call is completed.
Symantec is a global leader in infrastructure software, enabling businesses and consumers to have confidence in a connected world. The company helps customers protect their infrastructure, information, and interactions by delivering software and services that address risks to security, availability, compliance, and performance. Headquartered in Cupertino, Calif., Symantec has operations in 40 countries. More information is available at www.symantec.com.
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FORWARD-LOOKING STATEMENTS: This press release contains statements regarding our financial and business results, which may be considered forward-looking within the meaning of the U.S. federal securities laws, including statements relating to projections of future revenue and earnings per share for the fourth quarter and fiscal year 2007, and projections of deferred revenue, cash flow from operations, amortization of acquisition-related intangibles and stock-based compensation. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include those related to: maintaining customer and partner relationships; the anticipated growth of certain market segments, particularly with regard to security and storage; the competitive environment in the software industry; changes to operating systems and product strategy by vendors of operating systems; fluctuations in currency exchange rates; the timing and market acceptance of new product releases and upgrades; the successful development of new products and integration of acquired businesses, and the degree to which these products and businesses gain market acceptance; and any potential effects of Staff Accounting Bulletin 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” which we will be required to adopt in fourth quarter of fiscal year 2007, on our results of operations and financial conditions. Actual results may differ materially from those contained in the forward-looking statements in this press release. Additional information concerning these and other risk factors is contained in the Risk Factors section of our Form 10-K for the year ended March 31, 2006 and our Form 10-Q for the quarter ended Sept. 30, 2006. We assume no obligation to update any forward-looking information contained in this press release.
USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations have undergone significant change due to a series of acquisitions, the impact of SFAS 123(R) and other corporate events. To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to our quarterly earnings release and which can be found, along with other financial information, on the investor relations page of our Web site at www.symantec.com/invest/center.html.