Symantec's 1Q16 Results Fail to Cheer Investors
(Continued from Prior Part)
Symantec’s Enterprise Security segment
Previously in this series, we saw that Symantec (SYMC) posted a double-digit, or 14%, fall in its revenue in fiscal 1Q16. All of its operating segments followed the same trend. However, if we consider currency fluctuations, specifically US dollar (UUP) appreciation and the adjustment of the length of the quarter to make it comparable with fiscal 1Q15, Symantec’s Enterprise Security business actually posted 3% growth.
Although minimal, this is the first time in the last two years that this segment has managed to post YoY (year-over-year) growth. It’s expected that with Veritas being out of its way, Symantec can focus on security products to expand its horizons. It may promote its traditional endpoint malware prevention products as a cloud-based service and expand its managed and professional security services offerings.
Symantec has strategically allocated funds to generate growth
In a previous Symantec’s earnings series, we highlighted that Symantec has identified backup appliances and security businesses like mobile, ATP (advanced threat protection), managed security services, and DLP (data loss prevention) as its strategic areas for funding and growth. Its entry into the rapidly growing ATP market is expected to boost this segment’s growth. One of its key focus areas is DLP. It also posted double-digit growth in 2014.
As we discussed previously in this series, Symantec launched DLP 14. It extends its on-premise DLP capabilities to cloud, email, and storage applications, like Box and Microsoft’s (MSFT) Office 365. Its peer, IBM (IBM) has a somewhat similar agreement with Box and Dell with Dropbox.
It’s likely that the boost in Symantec’s cash reserves from the Veritas sale will be used to fund growth in the Enterprise Security portfolio and initiatives in 2016.
You can consider investing in the iShares U.S. Technology ETF (IYW) to gain exposure to Symantec. IYW invests about 0.45% of its holdings in Symantec.
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