Symantec just held a conference call that failed to answer the one question on everybody's mind

Key Points
  • Symantec executives hosted a conference call on Monday and failed to do little more than address the concern on everyone's minds: the investigation announced last week.
  • But as it turns out, CEO Greg Clark on Monday had little to say about the investigation, instead focusing primarily on fiscal 2019 and 2020 outlook.
Greg Clark, former CEO of Symantec, speaks during an interview in San Francisco.
Bloomberg | Getty Images

Symantec executives hosted a conference call on Monday to "provide more information" on an internal investigation, which sent shares plunging when it was announced last week.

But the call did little more than acknowledge the investigation.

Symantec CEO Greg Clark explained on the call that executives "can't answer any questions about the investigation," and instructed investors to read a prepared statement, issued just before the call.

When Symantec announced on Thursday it would launch an internal audit, the cybersecurity company that makes Norton anti-virus software did not elaborate much about the nature of the audit. Shortly after the announcement, Rosen Law Firm, a firm that represents investors, put out a press release saying that it's investigating whether Symantec "may have issued materially misleading business information to the investing public."

Symantec loses a third of its value after news of internal audit

Monday's statement did shed some light on the announcement. The "employee concerns" that kicked off the audit involved Symantec's commentary on historical financial results, and certain reporting measures that could impact executive compensation programs, forward-looking statements, stock trading and retaliation, according to the statement.

"For anyone concerned about executive compensation at this time, all discretionary and performance-based compensation for named executives is on hold pending the outcome of the audit committee investigation. This is welcomed by management," Clark said.

The statement also said Symantec did not anticipate "a material adverse impact on its historical financial statements."

The call instead focused forward-looking statements, circled back on guidance for fiscal year 2019, which started on April 1, and shared previously undisclosed details about the company's outlook for fiscal 2020, which will begin in April 2019.

CFO Nicholas Noviello said the company anticipated revenue to grow in the mid to high single digits in fiscal 2020. EPS is anticipated to grow in the low double digits, and total company operating margins are expected to be in the mid 30s.

Symantec announced the audit alongside fourth quarter earnings. Despite beating on earnings and revenue, shares of Symantec closed last week down 37 percent. Symantec pared losses on Monday, gaining nearly 10 percent in the regular session and another 1.8 percent after the bell.

The full text of Symantec's prepared statement is below:

The Audit Committee of the Board of Directors has commenced an internal investigation in connection with concerns raised by a former employee regarding the Company's public disclosures including commentary on historical financial results, its reporting of certain Non-GAAP measures including those that could impact executive compensation programs, certain forward-looking statements, stock trading plans and retaliation. The Audit Committee has retained independent counsel and other advisors to assist it in its investigation. The Company has voluntarily contacted the Securities and Exchange Commission to advise it that an internal investigation is underway, and the Audit Committee intends to provide additional information to theSEC as the investigation proceeds. The investigation is in its early stages and the Company cannot predict the duration or outcome of the investigation. The Company's financial results and guidance may be subject to change based on the outcome of the Audit Committee investigation. It is unlikely that the investigation will be completed in time for the Company to file its annual report on Form 10-K for the fiscal year ended March 30, 2018 in a timely manner. At this time, the Company does not anticipate a material adverse impact on its historical financial statements.