Symantec reports third quarter fiscal 2011 results

Symantec Corp. today reported the results of its third quarter of fiscal year 2011, ended Dec. 31, 2010. GAAP revenue for the fiscal third quarter was $1.604 billion, up 4 percent year-over-year and up 5 percent after adjusting for currency. 

“We completed another strong quarter and delivered better than expected results, driven by consumer, backup and data loss prevention as well as stability in the storage management business. In addition, our recent acquisitions are performing above expectations,” said Enrique Salem, president and chief executive officer, Symantec. “Our focus on helping customers secure and manage their information and identities in an increasingly mobile, cloud-based and virtualized world positions us well for long-term growth.”  

“In the December quarter, we delivered on all of our key financial metrics. We continued to generate substantial cash flow from operations and achieved record deferred revenue, as a result of strong bookings performance and the contribution from our recent acquisitions,” said James Beer, executive vice president and chief financial officer, Symantec. “This greater than expected deferred revenue performance drove higher sales commissions during the quarter.”

GAAP Results: GAAP operating margin for the third quarter of fiscal year 2011 was 14.3 percent. GAAP net income for the fiscal third quarter was $132 million. GAAP diluted earnings per share were $0.17.

GAAP deferred revenue as of Dec. 31, 2010, was $3.408 billion compared with $3.049 billion as of Jan. 1, 2010, up 12 percent year-over-year on an actual and currency-adjusted basis. Cash flow from operating activities for the third quarter of fiscal year 2011 was $460 million compared with $393 million for the same quarter last year, an increase of 17 percent. Symantec ended the quarter with cash, cash equivalents and short-term investments of $2.452 billion. 

Non-GAAP Results: Non-GAAP operating margin for the third quarter of fiscal year 2011 was 23.6 percent.  Non-GAAP net income for the third quarter was $272 million. Non-GAAP diluted earnings per share were $0.35.

During the third quarter of fiscal year 2011, Symantec repurchased approximately 16 million shares for $265 million at an average price of $17.03. Symantec has $1.06 billion remaining in the current and newly approved board authorized stock repurchase program.

Business Segment and Geographic Highlights

For the quarter, Symantec’s Consumer segment represented 31 percent of total revenue and increased 4 percent year-over-year (5 percent after adjusting for currency). The Security and Compliance segment represented 26 percent of total revenue and increased 13 percent year-over-year (14 percent after adjusting for currency). The Storage and Server Management segment represented 37 percent of total revenue and increased 1 percent year-over-year (3 percent after adjusting for currency). Services represented 6 percent of total revenue and declined 17 percent year-over-year (15 percent after adjusting for currency).

International revenue represented 52 percent of total revenue in the third quarter of fiscal year 2011 and increased 6 percent year-over-year (9 percent after adjusting for currency). The Europe, Middle East and Africa region represented 29 percent of total revenue for the quarter and declined 3 percent year-over-year (increased 5 percent after adjusting for currency). The Asia Pacific/Japan revenue for the quarter represented 17 percent of total revenue and increased 14 percent year-over-year (8 percent after adjusting for currency). The Americas, including the United States, Latin America and Canada, represented 54 percent of total revenue and increased 5 percent year-over-year on an actual and currency-adjusted basis.

Acquisition Highlights

Recent acquisitions continue to perform better than expected. For the quarter, the VeriSign security acquisition generated revenue of $48 million and the PGP and GuardianEdge acquisitions generated revenue of $18 million. The combined earnings per share dilution of these acquisitions was $0.035, which was $0.01 better than expected. 

Symantec utilized its recently acquired authentication and encryption technologies to enhance the Symantec portfolio and leveraged the global Symantec distribution network to grow these product lines. This quarter, VeriSign SSL had its highest bookings in nine quarters, its installed base grew by double digit percentage points and VeriSign’s authentication services are now integrated into the Symantec Protection Center, which provides a unified enterprise security management solution.  In addition, PGP and GuardianEdge technologies have recently been combined in Symantec Endpoint Encryption 8.0, supporting full disk encryption on multiple operating systems, including Mac OS.

Fourth Quarter Fiscal Year 2011 Guidance

Guidance assumes an exchange rate of $1.35 per Euro for the March 2011 quarter versus the actual weighted average rate of $1.38 per Euro for the March 2010 quarter. The end of period rate for the March 2010 quarter was $1.35, in line with our assumption for the March 2011 quarter.

For the fourth quarter of fiscal year 2011, ending April 1, 2011, revenue is estimated between $1.585 billion and $1.605 billion, up 4 to 5 percent year-over-year.

GAAP diluted earnings per share are estimated between $0.15 and $0.16. Non-GAAP diluted earnings per share are estimated between $0.35 and $0.36.

Deferred revenue is expected to be in the range of $3.61 billion and $3.64 billion, up 13 to 14 percent year-over-year.