Symantec has more shoes to drop.
Posted on April 29, 2008
Symantec reports earnings after the close on Wednesday and we have no idea what it will be like. What we do know is that the situation in the field for Symantec is going from bad to worse.
Our most recent report was produced in partnership with TheInfoPro which collects input from enterprise customers to understand fundamental technology shifts within IT. The data for Symantec has been declining steadily for some time and has recently accelerated on the downside. If the current trends continue Symantec spending intentions will suggest an actual YoY decline for the first time since data starting being collected back in 2003.
The root of the problem lies in the lack of execution between management vision and the company acquisitions and the customer. Products haven’t been integrated. The sales teams have suffered from lack of training and high turnover. Customers are relating horror stories regarding technical support and customer service.
Our report details a bit more of the data and delves into valuation using typical approaches along with our own long-term valuation framework and the forensic accounting of New Constructs. The net result is a fair value of about $14/share.
The only good news for shareholders is that the stock is already trading at a level where an acquisition by CA, HP or BMC would work. That’s the only positive scenario we see now given that management hasn’t even acknowledged the depth of the issues, let alone start solving them. (Dell is at least past the acknowledgement stage here and working on solutions.)
Based on what we see one would expect conservative guidance on Wednesday and an interesting Analyst Day on June 12th.
– Kris Tuttle
Tags: Symantec, IBM, HP, TheInfoPro, NewConstructs
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