On Wednesday, Symantec released its fiscal third-quarter 2007 figures for the period ending Dec. 29, 2006, stating earnings of $248 million, down from $282 million in the same quarter the year before. Net income, however, was $114 million, up 25% year-to-year, to 12 cents per share.
Last week, Symantec announced it wouldn't meet earlier third-quarter forecasts, saying then that net income would come in at 10 to 11 cents per share, down from previous forecasts of between 14 and 15 cents. At the time, CEO John Thompson blamed the shortfall on weak performance from the company's Veritas group and a shift by more enterprises to long-term maintenance contracts.
After the announcement, Symantec stock dropped more than 13% in one day to fall to $17.79. Although shares recovered somewhat, Thursday's mid-day price of $18.20 was still down $1.68 from before the restated estimates. As promised a week ago, Symantec on Wednesday also unveiled cost-cutting moves. The entire package will total $200 million and will include reductions in new hires, contractor spending, and travel; facility consolidation; and unspecified culls of the current workforce.
"With a disappointing quarter behind us, we are moving to better align our costs with our new revenue expectations," said Thompson in a conference call with reporters and analysts Wednesday. "I am confident that we have the right strategy in place. However, we must sharpen our execution."
Even so, analysts remained cautious. "The company did announce a cost-cutting initiative, which should further align its cost structure with a lower revenue trajectory over time, [but] unfortunately for Symantec and its investors, it seems that each quarter brings new challenges for both the company and investors, thus thickening the black clouds already hovering over its head," said Daniel Ives, an analyst with Friedman Billings Ramsey, in a research note to clients Thursday.
"While we applaud these cost-cutting efforts, these reductions are gradual and are only expected to impact the FY 4Q07 [March] cost structure minimally," Ives continued. "We are not expecting to see the full impact of these cost-cutting initiatives until FY09 based on our current model."
Among the bright spots in Symantec's filing with the SEC was news that the company's consumer business -- largely based on Norton AntiVirus and Norton Internet Security -- grew 24% year-over-year.