Symantec tumbles on job cuts, lackluster earnings forecast
(Bloomberg) -- Symantec Corp., the world’s biggest maker of cyber-security software, tumbled as much as 15 percent after announcing it will cut as much as 8 percent of its workforce and gave a disappointing forecast for quarterly profit and revenue.
The company expects to record $50 million in restructuring costs for the job reductions, which will occur through the rest of the fiscal year, Chief Financial Officer Nicholas Noviello said on a conference call Thursday to discuss earnings. Symantec had more than 11,800 employees as of December. The employee cuts and earnings forecasts that missed analysts’ estimates signal that Symantec’s shift toward selling more to businesses isn’t yet overcoming waning consumer interest in antivirus programs for personal computers.
The shares fell to as low as $17.81, the biggest drop since May, when the Mountain View, California-based company disclosed an internal investigation. In its earnings statement, Symantec simply said that the probe is “ongoing,” and that financial results from the fourth quarter of 2018 and later are subject to changes because of the inquiry. On the call, Chief Executive Officer Greg Clark said the company couldn’t comment beyond that.
Symantec said profit before certain items in the second quarter, which ends in September, will be 31 cents to 35 cents a share, compared with analysts’ average estimate of 38 cents, according to data compiled by Bloomberg. The company is predicting adjusted revenue of $1.13 billion to $1.16 billion, less than the average analyst projection of $1.19 billion.
In the fiscal first quarter, Symantec had adjusted earnings of 34 cents a share, compared with the average estimate of 33 cents, and revenue of $1.17 billion, beating analysts’ average forecast for $1.15 billion.
Management has not shed much light on the nature of the underlying allegations of its investigation. All that’s publicly known is that the accusations were made by a former employee and concerned Symantec’s comments about historical financial results and reporting on issues including executive compensation, stock plans and unspecified “retaliation.”
Symantec said it has hired an outside law firm and alerted the U.S. Securities and Exchange Commission about the matter.