Tag Archives: panw

Symantec To Cut 1,200 Jobs, Close Offices After Q4 Sales Miss

Symantec ( SYMC ) is cutting 1,200 jobs and closing a quarter of its offices as part of a broad $400 million cost reduction plan, the No. 3 cybersecurity firm announced Thursday as it reported fiscal Q4 sales that missed Wall Street views. On Friday, William Blair analyst Jonathan Ho said he was “perplexed” by the cuts at a time when older, legacy players like Symantec need to work to catch up with next-generation vendors such as  Palo Alto Networks ( PANW ). “We are perplexed at how the company plans to reposition itself as a next-generation security player and reaccelerate growth, while simultaneously reducing spending and headcount,” Ho wrote in a research report. But he called the strategy “ambitious” and maintained his market perform rating on Symantec stock. In morning trading on the stock market today , Symantec stock was up a fraction, near 17. Shares began forming a handle on March 21, but they have since fallen 10%, matching an equal decline in IBD’s 26-company Computer Software-Security industry group. For its fiscal Q4 ended April 1, Symantec reported $873 million in sales and 22 cents earnings per share minus items, down a respective 6% and 24% year over year, but in line with the company’s preannouncement. Both metrics lagged the consensus of 29 analysts polled by Thomson Reuters for $878.7 million in revenue and 23 cents EPS. Symantec’s $3.6 billion in fiscal 2016 sales met the consensus model, but $1.03 EPS ex items missed by a penny. On a year-over-year basis, the measures fell 10% and 21%, respectively. Adjusting for currency, consumer sales fell a respective 7% and 9% during fiscal Q4 and fiscal 2016, leading 4% and 2% declines in enterprise sales. Symantec blamed the enterprise decline on a shift in customer spending toward subscriptions and away from licenses. Ho said the accelerating migration to next-generation subscription products disfavors a legacy player like Symantec. “We remain concerned that the long-term transition away from legacy antivirus to next-generation solutions may be happening at an accelerating pace, which could be a headwind to Symantec’s legacy business,” he wrote. Current-quarter guidance for $865 million to $895 million in sales and 24-26 cents EPS minus items would be down 4% at the midpoints. For fiscal 2017, Symantec guided to $3.49 billion to $3.58 billion, which would be down 2% at the midpoint but better than the 10% decline in fiscal 2016. Symantec’s job cuts represent about 9% of its workforce and will save about $100 million, CFO Thomas Seifert told analysts on the company’s earnings conference call late Thursday. As of Thursday, Symantec’s 11,223 headcount was already down 43% from a year ago. The company hopes that closing 25% of its facilities will save another $35 million. The company also plans to trim target service agent and IT costs “stranded” after the Veritas divestiture, and it is reining in $100 million in spending. Symantec early this year completed the sale of data storage software maker Veritas to a group led by private-equity firm Carlyle Group ( CG ) for about $5.3 billion after taxes.

Broad Security Freeze: Palo Alto Demand Stalls; Q2 Views Lukewarm

Palo Alto Networks ( PANW ) stock tumbled Thursday after a Piper Jaffray analyst said that lackluster April demand and Q2 guidance from Check Point Software Technology ( CHKP ), FireEye ( FEYE ) and Imperva ( IMPV ) could signal a broad cybersecurity slowdown. IBD’s 26-company Computer Software-Security industry group is down 18.5% for the year after toppling 32% through Feb. 9, on bleak guidance for IT spending from firms like LinkedIn ( LNKD ) and Tableau Software ( DATA ). Barracuda Networks ( CUDA ), Check Point, FireEye and Fortinet ( FTNT ) recently missed full-year views. Imperva and Proofpoint ‘s ( PFPT ) Q2 outlooks lagged the consensus. Now, channel checks show April demand slowed, Piper Jaffray analyst Andrew Nowinski says. “The key takeaway from Q1 earnings season is that the security sector is starting to show signs of slowing based on the guidance that was provided for Q2 and fiscal 2016,” he wrote in a research report Thursday. Cybersecurity stocks toppled Thursday on Nowinski’s assessment. IBD’s security group was down 2% in morning trading on the stock market today , with Palo Alto Networks and FireEye stocks leading the deluge, down a respective 6% and 4%. Palo Alto Networks stock was at a two-month low, near 130. IBD’s Take: How does Palo Alto Networks stack up, and how does it compare to its rivals? Find out at IBD Stock Checkup But some analysts say Palo Alto Networks could beat guidance when it posts fiscal Q3 earnings on May 26. The company has topped the high-end of its outlook by an average 5.6% for the past 11 quarters. To do so again, Palo Alto would have to report $356 million in sales. The consensus of 43 analysts polled by Thomson Reuters models $339.4 million in April-quarter sales, which would be up 45% vs. the year-earlier quarter. But $549.5 million in July-quarter billings expectations, up 40%, might be too aggressive, Nowinski wrote. During the April quarter, some delays in large contracts likely hurt Palo Alto Networks, Nowinski wrote. “Most (resellers) thought it was simply due to a ‘digestion period’ where customers were still trying to integrate products they purchased in 2015,” he wrote. “The results definitely indicate demand slowed sequentially and also on a year-over-year basis.” Nowinski expects Palo Alto Networks to at least meet estimates, but he cut his price target on Palo Alto Networks stock to 180 from 208. He reiterated an outperform rating, but wrote that “this is the first quarter in at least two years where we picked up any sort of slowdown in Palo Alto’s demand trends.”

Fortinet Crushes Q1 Model; Faces Palo Alto, Cisco With Platform Bet

Fortinet ( FTNT ) topped Wall Street’s Q1 views late Tuesday and threw down a platform gauntlet with a “Security Fabric” that could challenge Palo Alto Networks ( PANW ) and Cisco Systems ( CSCO ), a Dougherty analyst said Wednesday. In afternoon trading on the stock market today , Fortinet stock was up 7.5%, at a four-month high above 33. Shares of fellow cybersecurity firm Barracuda Networks ( CUDA ), meanwhile, were up 17%, at a three-month high near 18, after that company late Tuesday posted a fiscal Q4 and fiscal 2016 beat. But Summit Research analyst Srini Nandury says Barracuda has “too many moving parts” and won’t survive a mass small- and medium-business exodus to cloud products from the likes of Microsoft ( MSFT ) and Amazon.com ’s ( AMZN ) Amazon Web Services. Fortinet Tops On Service Revenue For Q1 ended March 31, Fortinet reported $284.6 million in sales and 12 cents earnings per share minus items, up a respective 34% and 50%, vs. the year-earlier quarter, and topping the consensus for $273.4 million and 9 cents. Billings flew 30% to $330.5 million, above Fortinet’s earlier guidance for $315 million to $322 million. Dougherty analyst Catharine Trebnick credited Fortinet’s sales beat to $160 million in service sales vs. expectations for $150.3 million. Billings from FortiSandbox, which offers advanced threat protection and virtual software, jumped 270% year over year. Bundling also helped drive outperformance, Trebnick wrote in a research report. Fortinet is pushing its “Security Fabric,” which attempts to holistically combine Fortinet’s products under “a single pane of glass.” “We believe this strategy could help incrementally improve margins and would generate more sticky revenue for the company from their SaaS components,” she wrote. “It remains to be seen whether they can outperform competitors such as Palo Alto Networks and Cisco Systems.” Trebnick boosted her price target on Fortinet stock to 40 from 38 and reiterated a buy rating. For Q2, Fortinet guided to sales of $301 million to $306 million, up 27% at the midpoint, and EPS ex items of 14 cents. Billings guidance for $365 million to $370 million would be up 24% at the midpoint. The consensus of 33 analysts polled by Thomson Reuters called for $300.8 million in sales and 15 cents EPS ex items. Barracuda SMB Customers ‘Hijacked’ Barracuda topped Wall Street’s billings and sales views for the first time in four quarters, William Blair analyst Jonathan Ho noted in a report. He reiterated his market perform rating on Barracuda stock, but questioned whether the company could survive the cloud transition. “The Barracuda story looks to have fundamentally changed, with the core value proposition of delivering IT solutions at low cost and complexity to SMB customers being hijacked by public cloud providers,” he wrote. For fiscal Q4 ended Feb. 29, Barracuda reported $83.7 million in sales and 15 cents EPS minus items, up a respective 16% and 114% vs. the year-earlier period, beating the consensus for $80.9 million and 8 cents. Billings were flat at $95.8 million. The company wrapped fiscal 2016 with $320.2 million in sales, 42 cents EPS minus items and $377.5 million in billings, up 15%, 50% and 4%, respectively. Sales and EPS flew past the consensus model of 16 analysts polled by Thomson Reuters for $317.3 million and 35 cents. But fiscal Q1 is expected to decelerate markedly on a year-over-year basis. For the current quarter, Barracuda guided to $83 million to $85 million in sales, 10-11 cents EPS minus items and $94 million to $96 million in billings, up 8%, 2% and 1%, respectively, at the midpoints.