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Symantec Corporation (SYMC - Analyst Report) reported earnings per share of 39 cents in the first quarter of 2013, comfortably ahead of the Zacks Consensus Estimate of 33 cents.
Symantec reported revenues of $1.67 billion in the quarter, up 0.9% year over year from $1.65 billion. The company's investment in cloud security and mobility is slowly paying off, and this is helping the company to gain market share globally.
Symantec's Consumer segment represented 31.0% of the total revenue and was down 1.0% year over year during the quarter. Security and Compliance segment (around 30.0% of the total revenue) increased 7.0% on a year-over-year basis.
This apart, Storage and Server Management segment of the company represented around 35.0% of the total revenue and reported a year-over-year decrease of 2.0%. Moreover, the Services segment represented 4.0% of the total revenue and declined approximately 2.0% on a year-over-year basis.
The company generated around 51.0% of the total revenue from the International market and remained flat on a year-over-year basis. Moreover, the Europe, Middle East and Africa region (26.0% of revenues) declined 8.0% on a year-over-year basis. Asia Pacific/Japan revenue (contributing around 19.0% of the total revenue) registered a growth of 9.0% on a year-over-year basis. The Americas, which includes United States, Latin America and Canada, represented around 55.0% of the total revenue, and witnessed a year-over-year growth of 3.0%.
Gross margin in the quarter was 82.97%, down 136 basis points (bps) from 84.33% in the year-ago period. The decline in gross margin was due to higher costs associated with the company’s businesses, and the company expects this trend to continue going forward.
Operating margin was 16.1%, down 220 bps from 18.3% in the year-ago quarter. Operating margin declined as a result of higher operating expense, arising from a substantial increase in research & development and general & administrative expenses.
Net income in the reported quarter was $172.0 or 24 cents per share compared with $191.0 million or 25 cents per share in the year-ago period.
Excluding special items like operating expense adjustment, non-cash interest expense and related tax adjustments, adjusted net income in the quarter was 39 cents per share compared with 37 cents per share in the year-ago period.
Symantec registered cash, cash equivalents and short-term investments of $4.08 billion, compared with $3.21 billion in the prior quarter. Long-term debt for the company stood at $2.09 billion, up from $2.04 billion in the previous quarter. Cash flow from operating activities was $340 million versus $503 million the year-ago period.
During the quarter, the company repurchased 19 million shares for an average price of $15.59, totaling $301 million.
The company expects GAAP revenue to be in the range of $1.635 billion and $1.665 billion, reflecting a year over year decline of 1.0%-3.0%, for the fiscal year 2013.
Symantec has delivered modest first quarter results with EPS surpassing the Zacks Consensus Estimate and revenue improving on a yearly basis. The company also witnessed a mixed geographical revenue performance. The company has enough cash in hand and repurchased shares during the quarter
Uncertainty over PC sales is going to affect its Consumer segment throughout the year. Moreover, as smaller companies like Kaspersky are coming up with better products at regular interval, it is intensifying the competition in this segment.
Reduction in tech spending by different government and private organization, 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 prospect. Symantec provided a mediocre guidance, and we believe that this could be due to the above mentioned reasons.
Symantec has a Zacks #4 Rank, implying a short term Sell rating.