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Symantec ( SYMC ) Q3 sales are expected to dip below $1 billion for the first time since 2007, and Wall Street will closely watch the company’s Q4 outlook, which follows the completed sale of its data storage unit Veritas late last month. Intraday on the stock market today , Symantec stock was down fractionally ahead of the Q3 earnings report due late Thursday. Shares are down 8% since New Year’s Day and only rose a fraction when Veritas sold on Jan. 29. For its fiscal 2016 third quarter, ended Jan. 1, Symantec is expected to report $905.8 million in sales and 24 cents earnings per share ex items, down 45% and 55%, respectively, vs. the year-earlier quarter. That consensus view of 29 analysts polled by Thomson Reuters topped the midpoint of Symantec’s guidance, issued three months earlier, for $890 million-$920 million and 22-25 cents. Symantec said in January that its Q3 sales, operating margin and EPS minus items would come in above the midpoint of earlier views. Analysts were split last month on Symantec’s sale of Veritas, which it acquired in 2005 for $13.5 billion. Nine days before the deal closed, the Carlyle Group lowered its offer for a purchase price of $7.4 billion. The companies agreed to increase the amount of offshore cash remaining in Veritas to $400 million from $200 million, resulting in a net consideration to Symantec of $7 billion. The original deal valued Veritas at $8 billion. On Jan. 29, Symantec received $5.3 billion in after-tax cash proceeds when the sale closed, according to the company’s press release. Symantec will return more than $4 billion in capital to shareholders by the end of March 2017. Symantec CEO Michael Brown praised the deal, noting Symantec now “has a clear path forward as the global leader in cybersecurity.” Symantec has a market value of about $13 billion. It lags Check Point Software Security ( CHKP ) at $14 billion but tops Palo Alto Networks ( PANW ) at a little over $12 billion. Analysts have suggested Symantec will likely mount an M&A battle for cybersecurity supremacy. Symantec is struggling to keep up with the industry’s shift to next-generation technology touted by specialists like Palo Alto Networks, CyberArk Software ( CYBR ) and Check Point, William Blair analyst Jonathan Ho wrote in a research report last month. “The company will need to be prudent in terms of deploying capital to re-accelerate growth, given the high multiples for fast-growing companies,” he wrote. “The net reduction of $1 billion in capital to redeploy only services to limit that optionality further.” Scalper1 News
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