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Symantec shares collapse as sales shrink

And CFO quits

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First Symantec shocked investors, then investors shocked Symantec. The software maker saw its stock drop more than 20 per cent after reporting a second quarter loss, announcing the surprise departure of its CFO, and issuing a gloomy sales forecast.

When Symantec's acquisition of Veritas was first announced, many feared that the slower growing storage software market would weigh on Symantec's more lively security software business. Well, Symantec managed to mock these fears by showing that its core security business can grow just as slowly as the storage business. The company cut its fiscal 2006 revenue forecast by $130m to $5bn, citing poor sales of its consumer and corporate security products.

"It should be noted that consumer sell-through during the quarter appears to have slowed as compared with prior Septembers," CFO Greg Meyers told analysts. "This slowing is most likely a combination of the late release of our 2006 consumer products in the quarter, a lack of high profile threat activity and competitive pressures across the various consumer channels."

The gloomy outlook seemed to be the main reason for a 20 per cent drop in Symantec's stock price today. At the time of this report, Symantec was down 19 per cent at $19.45 per share.

Veritas managed to dent Symantec's results too. Symantec reported a $251m net loss during the second quarter with $284m in charges related to the Veritas buy. In the same period last year, Symantec reported a $136m profit.

Symantec also said that CFO Myers would resign. Former president John Schwarz recently left the company to take the CEO post at Business Objects. Some pundits have characterized these departures as the start of a post-merger brain drain.

"We are very pleased with our first quarter of combined operations," said John Thompson, Symantec's CEO in a press release titled "Symantec Reports Solid Second Quarter Earnings."

It would seem Thompson's investor e-mail account was down on the day. ®

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