Symantec Focuses on SMB

Small and Medium Business (SMB) has taken center stage in the business mix of IT security software provider Symantec Corporation ( SYMC - Analyst Report ) . Symantec is focusing more and more on the SMB segment as it holds good business potential and the company is looking to restructure its business model to seize the opportunity.

The company recently announced the formation of an organization dedicated entirely to cater to the SMBs and has also partnered with various companies to serve the SMBs and come up with innovative solutions. We believe this is an innovative business strategy adopted by the company that will impact its business customers and create a win-win situation for itself as well as its customers.

As per a recent study published by the Industry Consortium for Advancement of Security on the Internet (ICASI), several trends are contributing to a rapidly evolving threat landscape and presenting new challenges across the global IT infrastructure.

The study revealed that global Internet traffic is growing 40.0%-50.0% annually. The industry has been able to identify almost two billion Internet users, with four billion more users expected by 2013.The company expects most of this growth to come from the developing nations.

The statistics provided by the industry research body reveals the fact that there were some 13,762 vulnerabilities reported in 2010, which is a 12 fold increase compared to the data available in 2000. This is a big threat for both small and big companies as their systems are constantly exposed to the Internet. Today's cyber attacks are more complex and often difficult to detect, and can target classes of users. Some users are gaining access to valuable data and causing significant harm.

On the other hand, some SMBs take chance with their IT security system irrespective of the considerable security threats, given buying, deploying and managing security, storage and backup systems are too complicated and time, money and energy consuming. This may dampen the otherwise good demand to a certain extent.

Although the Internet security market is growing steadily and offers incremental growth opportunities, smaller companies like Kaspersky and Quick Heal that have resorted to aggressive pricing to sell their innovations remains a huge challenge to the company.

In our view, Symantec has delivered a modest fourth quarter with the bottom line surpassing the Zacks Consensus Estimate. Geographical and segmental performances were impressive, barring the EMEA and Service segments.

However, uncertainty over PC sales may affect its business in the upcoming quarters. Moreover, cautious tech spending by different government and private organizations, stiff competition from McAfee (acquired by Intel Corp. ( INTC - Analyst Report ) as well as the prevailing economic turmoil in Europe will likely dampen the company’s business prospects this year.

The company has a Zacks #5 Rank, implying a short term Strong Sell rating.