Symantec drops on sales disappointment
Shares of the software company slide 14 percent after it reports slower-than-expected sales of corporate security software.
Symantec's shares dropped $5.63 to close at $33.94 after several Wall Street analysts downgraded the company's stock.
The software company, best known for its antivirus software, earned a second-quarter profit of $45.8 million, or 72 cents a share, compared with $31 million, or 52 cents a share, during the same period last year.
Analysts had predicted earnings of 69 cents a share, according to a poll by First Call/Thomson Financial.
Symantec's overall second-quarter revenue jumped 14 percent, from $169.2 million last year to $192.3 million this year. But the company's sales to corporations fell far below analysts' expectations.
For more than a year, the company has been attempting to parlay its strong presence in the consumer antivirus software market into the more lucrative corporate security market, where the company competes against Trend Micro, ISS Group and others.
But while consumer sales rose 19 percent to $105.8 million, the company's corporate sales only grew 8 percent to $86.5 million.
Analyst Kevin Wagner, of Adams, Harkness & Hill, had expected growth rates of 30 percent year-over-year in the corporate market.
"In the last three quarters, they've had 19 percent growth, 28 percent growth, and now 8 percent growth, so it's up and down," Wagner said of corporate sales. "The segment is sluggish when it's supposed to be a core (revenue) driver."
Wagner and Prudential Securities both downgraded Symantec's rating from "strong buy" to "accumulate," while Pacific Crest Securities downgraded Symantec from "strong buy" to "buy."
Salomon Smith Barney maintained Symantec's "buy" rating, however.
"The company is still well-positioned in the security market for both the consumer and enterprise segments," Salomon Smith Barney analyst Chuck Jones wrote in a report.