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Symantec Posts 4Q Profit

Strong enterprise demand for hosted services, data loss prevention, backup, and archiving help push security vendor into black.
Symantec swung to profitability in the fourth quarter, with a 3% increase in revenue totaling $1.5 billion. For the fiscal year 2010, which closed April 30, revenue totaled $6 billion, down 3% from 2009.

Strong consumer sales -- increasing for the sixth quarter in a row -- were a major contributor to the fourth quarter gains, driven by the February release of Norton 360, which accounted for 37% of consumer revenue, as well as partnerships with nine of the top 10 commercial and consumer PC manufacturers.

Enterprise revenue -- with strong sales of hosted services, data loss prevention, backup, and archiving solutions -- was up 1% for the year. In particular, Symantec's software-as-a-service business, Symantec Hosted Services, posted double-digit growth and record revenue, especially from small and midsize customers. Meanwhile, storage and server management revenue declined slightly.

The increasing number of online threats targeting both businesses and consumers has also helped boost Symantec's revenue. Symantec created 2.9 million new malicious code signatures in 2009, a 71% percent increase from 2008. The threat environment is becoming much more targeted, said Enrique Salem, Symantec's president, director, and CEO.

Indeed, according to Symantec's State of Enterprise Security 2010 report, released in February, cyber attacks significantly increased for 7% of enterprises and somewhat increased for 22%. The report surveyed 2,100 IT managers, CIOs, and CISOs. All reported losses due to cyber attacks, including lost productivity, revenue, and customer trust. Respondents quantified those losses as totaling approximately $2 million per year.

Symantec's earning results followed its recent announcement that it would buy encryption vendors PGP, for about $300 million, and GuardianEdge, for about $70 million, in cash deals expected to close in June.

Analyzing the acquisitions in remarks on his blog, security analyst Jonathan Penn said that Symantec's continuing penchant for acquiring leading vendors -- based on customer base and market share -- has given it a formidable strategy for competing with its current rivals, and beyond. "In security, Symantec is clearly moving to more head-to-head competition against the mega-vendors with deep pockets: IBM, Cisco, Microsoft, EMC, etc," he said.