Changes in the company’s products and selling practices were more disruptive than management anticipated, and the slump in personal computer sales weighed on sales of Symantec’s antivirus products. The company’s CEO said in an interview that the quarter’s results were “my miss”:
These were all things we did intentionally. We have a bit of a hole to dig out of here because we made these changes that we know are the right things to help us long-term, but there is some short-term pain.
The question investors want answered is how long will the short-term pain last? The CEO said yesterday that the company is committed to targets in fiscal years 2015 through 2017. It is now halfway through fiscal year 2014, so the forecast projects added pain for several more quarters.
Symantec now expects annual revenue to decline by 3% to 4% year-over-year, non-GAAP operating margin to increase by 30 to 60 basis points and adjusted EPS to be lower by 1% to 1.5% compared with the previous fiscal year. The consensus full-year estimates had called for EPS of $1.90 on revenues of $6.94 billion.
A back-of-the-envelope calculation based on Symantec’s full-year guidance puts EPS in at around $1.74, based on fiscal 2013 EPS of $1.77. Last fiscal year’s revenues totaled $6.91 billion, and based on Symantec’s new guidance, current fiscal year revenues would fall to a range of $6.63 billion to $6.70 billion, compared with a current consensus estimate of $6.94 billion in revenues.
Shares were down about 11.7% shortly before noon Thursday, at $21.75 in a 52-week range of $17.38 to $27.10.
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