Symantec sees profits crash ahead of corporate divorce

Storage kids did OK in Q3 but security was the problem child

Symantec’s latest financials bear all the hallmarks of a business whose dramatic bisection is causing some uncertainty for customers and channel partners.

A cleaver will be driven through the security and storage business by the end of this year to create two separate publicly traded entities.

The groundwork for this is well under way with execs being assigned, costs being trimmed and the old Veritas brand dusted off, as channel partners had told us was being considered.

Top brass want the world to witness a smooth transition, but the financial progress does not match the operational progress in Q3 ended 2 January - turnover slid four per cent to $1.6bn.

Content, subscription and maintenance sales fell six per cent to $1.4bn while licence sales were up 15 per cent to $226m.

It is of note that while Symantec could not make a better fist of the combined organisation, only the storage business grew in the quarter, albeit up by just one per cent to $688m. NetBackup software, appliances and cloud helped out in this unit, the company said.

Consumer security - Norton - slipped 11 per cent to $461m and enterprise security was down four per cent to $509m.

The firm exited “certain unprofitable OEM and retail channel” consumer deals, and said it wants to “mitigate revenue” declines by “improving online customer acquisitions” and moving more to subscriptions. Symantec didn't explain the hiccup in its enterprise security wing.

Sticking plasters for the security business include simplifying the portfolio - reducing the number of products - and beefing up cyber security services.

Operating expenses edged up by one per cent to $1.03bn, and this contributed to a 19 per cent decline in operating profit to $327m. After interest, expenses and taxes, net profit came was $222m, down 22 per cent.

Despite the Q3 results, CEO Michael Brown said the corporate split has “already begun to improve both our strategic focus and operational discipline”.

“Our employees, partners and customers are energised about our future and our momentum is accelerated,” he continued on a conference call with analysts. ®

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