Symantec bubbles up, though services revenue deflates

Although services revenue was a blot on the earnings landscape, Symantec revenues and profits increased nicely in its first fiscal 2011 quarter.

The company reported revenues of $1.653bn, a chunky 15 per cent up year-on-year, with net income up 7 per cent to $172m. Symantec increased its operating margin from 13.5 per cent in the first 2010 quarter to 17.1 per cent this quarter.

The product splits were:

• Consumer – 32 per cent of revenues and up 11 per cent over the year;
• Security and Compliance – 28 per cent, up 31 per cent annually, a good growth rate;
• Storage and Server Management – 36 per cent, up 14 per cent annually; and
• Services – 4 per cent, and down 20 per cent year-on-year.

Symantec's Services business is pretty much a bust. It is moving to a partner-led model and the managed services business has been moved into the Security and Compliance business. The impact of that move is reflected in the 20 per cent shrink in its Services revenues this quarter.

Otherwise business looks good. CEO Enrique Salem says: "The current threat landscape continues to be toxic and targeted. In addition, information is growing at unprecedented rates. As a result, customers ... are expanding their commitment to Symantec."

Symantec's customers need its protection from ongoing threats, and its storage and server products to cope with the data deluge. It's good news for Symantec. ®