Key takeaways from Symantec's 2Q15 earnings (Part 14 of 14)

Is Symantec a profitable investment?

By Anne Shields Jan 6, 2015 10:30 am EDT

Symantec is a leading player in security space

With

$17 billion market capitalization, Symantec Corporation (SYMC ) is globally known for its Norton consumer security products. Its offerings are considered the best in antivirus and Internet software markets, as highlighted in earlier parts of this series. McAfee (INTC ) and IBM (IBM ) are other leading players in the market. In the past eight quarters, Symantec has beaten revenue and earnings estimates seven times and eight times, respectively, making it a profitable investment. The presentation below shows the leadership of Symantec in various markets.

ETFs that have significant exposure to Symantec include the PowerShares QQQ Trust ETF (QQQ ), which is likely to benefit when the company posts positive results.

Product offerings gaining acceptance in the market

Symantec has formed a partnership with Hewlett-Packard (HPQ ) to develop a new disaster recovery as a service (or DRaaS) solution based on HP Helion OpenStack. Growth in Symantec’s NetBackup appliances and DLP products has led to revenue and margin expansion.

SMAC presents risks as well as opportunities

As discussed in the earlier parts of this series, SMAC (social, mobile, analytics, and cloud) has led to exponential growth in data storage, security issues, and data breaches. After the split, both companies will be exposed to risks as well as opportunities. The company has taken a lot of steps to make this transition. Its future strategy and actions will decide if Symantec is able to hold up its reputation and remain a good investment. Due to its subscription-based business, there’s visibility to its revenues. Symantec’s strong cash and cash flow generation ensure that the company can allocate funds for its growth.

Retirement of slow-growing products to pave the way for profitable offerings

Symantec has retired its struggling Backup Exec Appliance offering. After retiring this offering, Symantec aims to renew its focus on the larger and more profitable enterprise PBBA (purpose-built backup appliance) market.

3Q15 expectations

For 3Q15, Symantec expects its revenues and earnings to be in the range of $1.65 billion to $1.69 billion and $0.47 to $0.50 per share, respectively. For the full fiscal year 2015, revenue and earnings per share (or EPS) are expected in the range of $6.6 billion to $6.8 billion and $1.88 to $1.93 per share, respectively. Earnings for 3Q15 are expected to be hit considerably by anticipated changes in the foreign exchange rates, as reported by the company.

Correction: When we originally published this post, it indicated that Symantec had retired its Backup Exec product line. However, Symantec actually only retired its Backup Exec Appliance offering—not the full product line. We apologize for this error.