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Symantec Will Be ‘Very Judicious’ With $5 Bil M&A War Chest: CEO

Symantec ( SYMC ) will have a $5 billion M&A war chest by 2018 — but it’s not burning a hole in CEO Mike Brown’s pocket. Brown told investors Thursday that the cybersecurity firm will be “very judicious” in finding the right acquisitions. Cybersecurity stocks were walloped early Friday, and IBD’s 26-company Computer Security-Software industry group plunged 7% after LinkedIn ( LNKD ) and Tableau Software ( DATA ) stocks crashed 40% and 47%, respectively, when both companies gave weak guidance late Thursday. But Symantec stock bucked the trend, giving in-line guidance late Thursday and posting fiscal Q3 earnings that topped Wall Street estimates. In midday trading on the stock market today , Symantec shares were up more than 4%, near 20, after rising as much as nearly 10% early. The company late Thursday also announced a $500 million investment from private equity firm Silver Lake Partners , bumping its capital return program to $5.5 billion — a development that Wall Street analysts called opportune as Symantec’s M&A appetite grows. Ken Hao, a Silver Lake managing partner, joined Symantec’s board. Symantec is undergoing a necessary transition as it attempts to become “leaner and more focused,” FBR analyst Daniel Ives wrote in a research report. Ives reiterated his market perform rating on Symantec stock. Symantec on Jan. 29 completed its sale of data storage unit Veritas to the Carlyle Group for a purchase price of $7.4 billion. Late Thursday, Brown also announced a restructuring effort that aims to cut $400 million from expenses over two years. “We believe the confluence of M&A, aggressive buybacks and a tighter operating model finally puts this company on the right path after a decade of pain,” Ives wrote. “This remains a work-in-progress name, but we are now starting to be more optimistic that better days could be ahead for a ‘leaner and more focused’ Symantec.” And it doesn’t hurt “to have (Silver Lake) in Symantec’s corner,” he added. Customer, Enterprise Sales Decline Fiscal Q3 sales of $909 million and 26 cents earnings per share ex items beat the consensus of 29 analysts polled by Thomson Reuters for $905.8 million and 24 cents. Customer revenue of $414 million and enterprise revenue of $495 million fell 10.2% and 2.8% year over year, respectively, Credit Suisse analyst Philip Winslow wrote in a report. But those measures topped his estimates for $411 million and $492 million, Winslow noted. Current-quarter guidance for $885 million to $915 million in sales and 24-27 cents EPS ex items were in line with Wall Street views for $901.7 million and 25 cents. Eventual acceleration within the customer segment is likely, Winslow wrote. But “the outlook for accelerating enterprise security growth is more uncertain given intense competition across the enterprise security landscape and the endpoint in particular.” Winslow maintained his neutral rating and 25 price target on Symantec stock. Symantec is positioning itself with 12 new product releases in 2016 to build “a strong reputation in the next-generation security market,” William Blair analyst Jonathan Ho wrote. Competitors within that segment include Palo Alto Networks ( PANW ), CyberArk Software ( CYBR ) and Check Point Software Technologies ( CHKP ). Ho reiterated his market perform rating on Symantec stock. Midday Friday, shares of Palo Alto Networks, CyberArk and Check Point were down 12%, 8% and 2%, respectively.

Tableau Tumbles On Microsoft Rivalry; Software Stocks Down Hard

Tableau Software ( DATA ) stock lost nearly half its value Friday, as investors reacted to weak first-quarter guidance late Thursday and the rise of Microsoft — and possibly Amazon.com — as a top rival in analytics, while enterprise software spending overall seems to be easing. Microsoft ‘s ( MSFT ) new PowerBI data-analytics software product, irresistibly priced for free against Tableau’s premium-priced product, won’t necessarily affect only Tableau’s campaign. Rival Workday ( WDAY ) stock was down 14% and Salesforce.com ( CRM ) was down 12% in midday trade in the stock market today . Security software stalwart  Palo Alto Networks ( PANW ) stock was down 11%. Tableau stock, though, was down 49% as its outlook for this quarter and the full year lagged far below Wall Street expectations. Wall Street analysts, who were mostly upbeat about Tableau a day earlier, raced to downgrade ratings or reduce price targets. “Tableau reported revenue that beat consensus by only 1% (lowest ever), or about $2 million, when the average beat over last 11 quarters is around $11 million,” Summit Research analyst Srini Nandury said in a research note. Summit slashed its price target on Tableau stock to 45 from 80, and maintained a hold rating. “Given that the company pulled down guidance for 2016, we believe Tableau is in the penalty box for the foreseeable future,” Nadury said. “We remain on the sidelines given our belief that 1) comps will get tougher from these levels; 2) competition continues to materialize” with Qlik Technologies ( QLIK ), MicroStrategy ( MSTR ), Salesforce.com, Amazon.com ( AMZN ) and Microsoft “all gunning for a piece of the action; 3) the market may not be as big as some on the Street believe as most Excel users (as Tableau targets) would never need a visualization function; and, 4) low-hanging fruit already has been picked.” Tableau said it added more than 1,000 employees, many of them in sales, in 2015 and now has a total workforce of 3,000-plus. But Kelly Wright, executive vice president of sales, is leaving by year’s end. Responding to an analysts’ question, on the company’s earnings conference call, about her departure amid the sales force buildup, management downplayed the transition. When her retirement was announced in January, CEO Christian Chabot said, “Kelly has provided the sales leadership we needed and built a world-class sales team.” She was Tableau’s first salesperson in 2005. Business-intelligence software maker Splunk ( SPLK ) was down 25% midday Friday, while Qlik was down 15. Microsoft stock was down 2%.      

Imperva Topples On Mixed Guidance But Clobbers Q4 Expectations

Cybersecurity firm Imperva ( IMPV ) topped analysts’ Q4 views, but its strangled current-quarter and 2016 guidance sent its shares to nose-diving to a 10-month low on Wall Street Thursday. Imperva stock was down 14% in midday trading on the stock market today , near 42.50, earlier falling as low as 41.81, after the company’s late Wednesday earnings report. At least four analysts cut their price targets on Imperva stock. For Q4, Imperva reported 20 cents earnings per share ex items on $72.7 million in sales, topping analysts projections for 15 cents and $68.1 million, and topping the company’s earlier view for 10-16 cents and $66 million to $68 million. Sales rose 41% year over year, and EPS minus items swung from a four-cent loss in the year-earlier quarter. Imperva wrapped up the year with $234.3 million in sales, up 43%, and 11 cents EPS ex items, swinging from a 74-cent loss in 2014. Both measures beat Wall Street expectations and the company’s forecast three months ago. Imperva’s Q1 Losses Expected To Deepen Current-quarter and 2016 guidance was a mixed bag. For Q1, Imperva sees $58 million to $60 million in sales and a 26-32 loss per share ex items. The sales view roughly met the consensus for $59.8 million, but Wall Street was expecting losses of just 11 cents a share ex items. On a year-over-year basis, Q1 sales would be up 32% at the midpoint of guidance, but losses would stagnate or deepen from 26 cents in the year-earlier quarter. Imperva guided 2016 sales at $302 million to $307 million, which would be up 30% at the midpoint. In September, Imperva saw 25% growth in 2016. But the EPS ex items view for 20 cents missed the consensus model for 30 cents, Summit Research analyst Srini Nandury wrote in a research report. Nandury and Piper Jaffray analyst Andrew Nowinski separately blamed the guidance flop on Imperva’s plan to invest more heavily in sales and marketing as well as research and development to gain market share. Both expect that Imperva’s guidance was conservative. Major breaches drove massive growth in earlier quarters and years, Nowinski wrote in a research report. But that “panic buying” has slowed, he says. “It is becoming clear that in the absence of ‘panic buying,’ the security space can still deliver strong top-line growth, but that growth will come at a higher-than-expected cost,” he wrote. Nowinski maintained his overweight rating on Imperva stock but slashed his price target to 54 from 84. Nandury dropped his price target to 70 from 80 but reiterated a buy rating on Imperva stock. Subscription Sales Drive Top Line Subscription revenue of $14.9 million, up 105%, drove Imperva’s top line, Nowinski wrote. The number of $100,000-plus deals grew 15.4% vs. the year-earlier quarter, “and the company did more seven-figure deals than in the entire history of the company.” William Blair analyst Jonathan Ho suggested long-term investors take advantage of Imperva’s stock weakness. Imperva stock is down 33% in 2016. “The fundamentals appear strong,” Ho wrote in a report. “However, we concede there will likely be some continued short-term volatility for security stocks in general due to challenging market conditions.” IBD’s 26-company Computer Software-Security industry group was down 2% midday Thursday and is down 20% for the year, earlier in the day touching a 16-month low.  Palo Alto Networks ( PANW ) and CyberArk Software ( CYBR ) lead the group with Composite Ratings of 81 and 80, respectively, out of a best-possible 99. Imperva stock has a CR of 47. Image provided by Shutterstock .