Symantec plans $200m worth of cuts
Incredibly shrinking data center sales
Symantec is to implement $200m worth of cuts as the security provider copes with flagging demand for its data center offerings and a deluge of free security programs from Microsoft and ISPs.
The savings will come from cutting jobs and new hires, reducing spending on contractors and consultants and paring travel costs. The measures come a week after Symantec warned that revenue and profit would fall below analyst expectations.
The company's shares rose 50 cents, or almost three per cent, in after-hours trading, as investors cheered the cost-cutting plan.
Net income for Symantec's third quarter was $113.7m, or 12 cents a share. That represented a 25 per cent increase over profit from the third quarter of 2005, but below last week's analyst estimates. Revenue for the period, which ended Dec. 29, rose 14 percent to $1.31bn, from $1.15bn, also lower than previous Symantec guidance.
The shortfall was the result of a eight per cent fall in Symantec's data center management business, which represents slightly more than one-quarter of revenue. The company also blamed a higher number of deferrals than expected, which were caused by an increase in enterprise maintenance contracts.
The company also reiterated last week's forecast that profit in the current quarter, before certain costs, would be 18 cents to 20 cents on sales of $1.24bn to $1.27bn, lower analyst estimates.
Symantec plans to repurchase as much as $1bn in stock over an undisclosed period of time. The company already has bought back $1bn in shares over the past 12 months. ®