Reportedly Symantec Corporation (SYMC - Analyst Report) plans to discontinue its Backup Exec.cloud service from Jan. 6, 2014, as it intends to completely detach itself from the PC market.
Backup Exec.cloud services forms a part of Symantec’s Information Management segment. Originally focused on small businesses, the cloud-based service offered faster backups and retrievals at the user, enterprise and server level.
It is a hybrid service that can be used both locally and off-site, which helps to protect critical data and takes care of a company’s evolving needs. However, it lacks data-sharing features and is not available on mobile devices.
This coupled with the secular decline in the PC market prompted Symantec to fully close the service.
We note that the PC market has declined 7.6% in the third-quarter of 2013 (according to IDC) and a recovery is unlikely over the next 2-3 years. This has negatively affected sales of Symantec’s PC security solutions to a considerable extent and also its business volume.
In the recently concluded second quarter of fiscal 2014, Symantec’s revenues declined 3.7% year over year to $1.64 billion, primarily due to a 3.0% year-over-year decline in the User Productivity & Protection segment and a 2.0% decline in the Information Security segment.
Moreover, the uncertainty over PC sales is expected to negatively impact its User Productivity & Production revenues throughout the remainder of the year. To counter this decline, the company is focusing more on cloud-based services that can be accessed from mobile devices.
Nevertheless, stiff competition from McAfee, Intel Corp. (INTC - Analyst Report) and Microsoft (MSFT - Analyst Report) , sluggish IT spending and lackluster macro-economic environment in Europe are expected to dampen Symantec’s business prospects in the near term.
Currently, Symantec carries a Zacks Rank #4 (Sell). A better-ranked stock in the technology sector is SanDisk Corp. with a Zacks Rank #1 (Strong Buy).