Feeds

Beached whale Symantec watches revenues recede 7%

Cost-cutting alone won't haul it into healthy growth waters

Maximizing your infrastructure through virtualization

Symantec’s latest results show that you can wring more profit out of declining revenues by slashing costs but its not enough to bring you back to growth.

Revenues in its fourth fiscal quarter of 2014 ended 28 March were $1.63bn, seven per cent down year-on-year, but net profit jumped 14 per cent to $217m.

The full year numbers saw revenues drop three per cent on fiscal '13 to $6.68bn, with net income of $898m up 19 per cent.

The main conclusion is that former CEO Steve Bennett’s attempts to bolster the top line didn't come off but he did manage to remove a heap of costs, largely by chopping workers, including a layer of middle managers.

All this leads the storage desk to ask: where does the beached whale of Symantec go from here? Right now it's dealing with stalled antivirus product revenues and the company’s board reportedly calling in an investment bank to look at strategic options, for example carving up operations.

Symantec Results to Q4 fy2014

Click the chart to see a larger version

The canned results quote from Michael Brown, Symantec interim president and CEO, didn’t provide any information about that, contenting itself with this:

“Our fourth quarter results, led by better performance from our sales teams and cost reductions, demonstrate the underlying health of our business. In the new leadership team’s first 40 days, we’ve taken important steps to accelerate the pace of our transformation. There are substantial opportunities for us to improve our growth profile, maximise profitability and create value, and I’m confident we have the right team and plans in place to achieve our objectives.”

This is just mere cheer-leading with little substance. Consider the “right team and plans in place to achieve our objectives” phrase. Symantec is looking for a new CEO and that person would obviously make new plans. It is also looking for a Chief Products Officer.

He said the board’s ideal CEO candidate will have an "understanding of the technology landscape, expertise growing a multi-product business at scale, and a strong record of collaborative leadership.”

Symantec full year results

As one would expect, Brown bigged up Symantec's storage assets, “In backup … we are the market leader with 30 per cent market share and growing at a rate that has outpaced the market for the past few years, we will continue to drive innovation in NetBackup and bring to market differentiated appliances, where we’ve got the fastest growing backup appliance in the industry. … In storage management, we’re investing in promising technologies such as software-defined storage, object storage, and Disaster Recovery as a Service, all of which we believe will be multi-billion dollar markets.”

The company is also changing its security focus: “In security, we are expanding our focus from 'prevention' to 'detection & response' to solve the advanced threat detection problem in a differentiated way. … we’ll be offering an industry-leading advanced threat protection solution which integrates protection across the gateway, email, and endpoint to deliver better multi-tier security. This offering includes Synapse, a new capability that integrates telemetry data across endpoints, gateways, and email to reduce false positives and operating costs for customers.”

CFO Thomas Seifert said cost-cutting and efficiency searching will continue: “We see further opportunities to streamline our operations and drive ongoing operating margin expansion, with the near-term goal of achieving 30 percent non-GAAP operating margin by Q4 '15. We will also continue to return significant capital to shareholders while maintaining a strong balance sheet.”

These "expense reduction initiatives" include consolidating real estate, data centres and product support, trying to boost R&D efficiencies and sales productivity and trying to "optimise the economics of our channel programes".

Channel types have been largely bewildered by Bennett's exit, claiming he was listening to them but wasn't given enough time to do the job he was tasked with, to turn around the operations.

Symantec's talk is all about persuading investors to stick with it while the board looks for a new chief exec and strategy to fire up the sales engine. Eventually cost-cutting will run its course and revenue declines will hit profit and the share price.

Brown added:

”We expect to return to revenue growth during the second half of fiscal ’15 and expect to build from there. Greater than 5 per cent revenue growth is firmly on our roadmap and we will provide updates on our growth trajectory and progress as we implement our initiatives.”

He thinks the revenue growth will come from product investments, such as software-defined storage, object storage, Disaster Recovery as a Service, and the security product and service investments.

Candidly we think, for what it's worth, this is pretty risky and Symantec would be far better off buying in new storage technology, much like EMC has recently done. But nothing like that is going to happen until a new CEO comes on board.

Beached whale

Forecasts for fiscal 2015 include revenues of between $6.63bn and $6.77bn. In the next quarter turnover is hoped to be between $1.65bn and $1.69bn. Essentially Symantec is looking for a new CEO with enough muscle to push its substantial body back into the waters so it can swim again. ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
Disaster Recovery upstart joins DR 'as a service' gang
Quorum joins the aaS crowd with DRaaS offering
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.