Symantec Posts 25% Increase in Quarter Profit, Plans to Cut Costs
Symantec, posted a 25% increase in quarterly profit on Wednesday, and said it planned to cut costs by $200 million.
Net income rose to $113.7 million, or 12 cents per share, for its third quarter ended Dec. 31, from $90.7 million, or 8 cents, a year ago. Revenue rose to $1.31 billion from $1.15 billion. Excluding items, profit was 26 cents, topping the average analyst estimate of 25 cents per share, according to Reuters Estimates.
Earlier this month, Symantec lowered its third-quarter guidance and said it expected a profit of 10 cents to 11 cents per share on revenue of $1.29 billion to $1.31 billion. It cited weak business software sales and higher-than-expected costs. The company's previous earnings estimate was 29 cents to 30 cents a share.
Before they issued the warning, Symantec had forecast a profit of 14 cents to 15 cents per share on revenue of $1.32 billion to $1.35 billion.
Symantec also announced a $1 billion stock buyback program. It has completed a $1 billion stock buyback plan announced in January 2006.
Cupertino, California-based Symantec plans to cut costs by $200 million by cutting some jobs, reducing new hires, decreasing contractor and consulting spending, lowering spending on travel, and consolidating facilities.
"The biggest thing is they announced the cost-cutting initiative, which the Street was hoping for," said FBR analyst Daniel Ives. "Symantec right now is in a conundrum. They're in a lower revenue trajectory, and they need to curtail expenses, which they're starting to do."
"With a disappointing quarter behind us, we are moving to better align our costs with our new revenue expectations," said Symantec Chief Executive John Thompson in a statement. "I am confident that we have the right strategy in place; however, we must sharpen our execution."
Symantec also reaffirmed its forecast for its March quarter. "The company is generally heading in the right direction strategically, but execution is the issue," analyst Ives said.
Shares of Symantec closed 7 cents higher to finish at $17.48 on the Nasdaq. It has since risen to $17.55 in extended trade.