Tags: Symantec | virtual | software | SYMC

Symantec Gearing Up for Virtual Future with M&A

By    |   Wednesday, 02 May 2012 03:44 PM

Symantec (SYMC) is gearing up for the virtual software future, buying up privacy and security providers in the online space in anticipation of increased demand. A slowing economy, however, is leading even bullish analysts to caution that its M&A growth depends on corporate spending going forward.

Symantec is a global provider of security, storage, and systems management solutions that help businesses and consumers secure and manage their information and identities. The software company does business in 48 countries in three reporting regions: United States, Canada, and Latin America; Europe, the Middle East and Africa; and Asia-Pacific Japan.

Symantec primarily sells security, backup and storage management software. In addition to information security products, the company is expanding into software-as-a-service (SaaS) and appliance-based offerings, management told investors recently.

“We have a broad portfolio of cloud-based solutions and services, from SaaS security to authentication services and online backup to cloud infrastructure management. These products help organizations lower costs and simplify IT administration, while keeping their information and identities secure,” they said.

Virtualization helps reduces costs, they point out, but it also increases the risk of attack on the Web. “Our solutions help organizations secure, manage and optimize their virtual environments from the datacenter to the endpoint,” management noted.

To that end, during 2011 the company acquired the identity and authentication businesses of VeriSign, PGP Corporation, and GuardianEdge Technologies for an aggregate amount of approximately $1.5 billion, net of cash acquired.

In addition to business initiatives, the company told investors that it bought back 57 million shares at a value of $870 million in fiscal 2011, ending April 1.

The company has a market cap of $12 billion in a sector, software, where the average company size is $13.11 billion. Its trailing 12-month P/E ratio is 15.97 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.73, compared to 0.11 for the sector.

Its projected earnings per share growth for the coming year is 6.21 percent, lower than the sector average at 14.11 percent.

Growth concern

Wall Street is largely positive on Symantec. Citigroup, UBS, and Jeffries rate the stock a buy. Friedman, Billings, Ramsay & Co. rate it at outperform.

Ahead of earnings to be released after market close today, Standard & Poor’s lowered its target price on Symantec to $18 from $20. “We believe growth is a concern,” S&P analysts wrote.

Symantec next reports on July 23.

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