SYMC ($66-$75)...p/e 666....: Reports Q3 earnings of $0.78 per share, $0.14 better than the consensus estimate; reports Q3 revenues of $290.2 mln versus the consensus estimate of $263 mln.
Symantec Up, McAfee Down After Beating Forecasts
By Ilaina Jonas
NEW YORK (Reuters) - Shares of anti-virus software maker Symantec Corp.(Nasdaq:SYMC - news) soared on Thursday after the company reported earnings that easily topped forecasts. Rival McAfee.com Corp.(Nasdaq:MCAF - news) also handily beat projections, but its shares fell 24 percent after worries about a one-time revenue boost made the pricey stock vulnerable, analysts said.
``It was just at a price that was priced for perfection,'' Morgan Stanley analyst chuck Phillips said of McAfee.
McAfee, which sells anti-virus software and personal computer management services on a subscription basis via the Internet, fell 24 percent.
Despite reporting earnings, before charges, of 9 cents a share, on $18.5 million in revenue after the close of the market Wednesday , shares were off $7.85 to $24.44 and were among the second leading loser in early afternoon trading on the Nasdaq.
``We expected the stock to trade down when the bears came out,'' J.P. Morgan analyst Aaron Schwartz said. He maintained the firms ``market performer'' rating on the stock and raised the firm's 2002 revenue outlook for the stock to $86 million, from $84 million.
If not for a change in pricing, which resulted in a one-time $1.6 million boost to revenues, McAfee.com would have missed some forecasts, analysts said.
``If you adjust for that, which some people are doing, then the revenue line wasn't quite as strong as it looked,'' Morgan Stanley's Phillips said.
In addition, the company recorded a net gain of 125,000 subscribers, at the low end of the 125,000-to -150,000 gain the company expected and off of the 180,000 gain some investors and analysts anticipated.
``At this valuation, people are a little bit cautions,'' Credit Suisse First Boston analyst Jonathan Feeney said. ``Now there's maybe some other stocks with great growth opportunities as Symantec showed at a little bit more reasonable valuation.
Shares of Symantec rocketed $6.53, or 10 percent to $73.48 and were the top net gainers in late morning trading on the Nasdaq.
After reporting quarterly earnings, without charges, of 78 cents versus Wall Street's consensus of 64 cents, Lehman Brothers analyst Israel Hernandez raised his rating on Symantec stock to a buy from a market perform, and set a price target of $85.
``We anticipated a strong quarter, but were really blown away by the amount of upside that Symantec was able to deliver in a horrible operating environment,'' Hernandez wrote in a research note. ``All the major business units exceeded expectations.''
Symantec's large enterprise unit saw its revenue grow by 44 percent over the prior year and accounted for 44 percent of overall revenue. The consumer business, which represents 38 percent of Symantec's total revenue grew at 20 percent, reversing a year-over-year decline the prior quarter witnessed.
Bear Stearns analyst Olivia Golden said she remained bullish on the Internet security market and Symantec's positioning within it. She reiterated the firm's ``attractive'' rating on the stock. Credit Suisse First Boston analyst Todd Raker reiterated the firm's ``buy'' rating on the stock and raised the price target to $80 from $77.
Other Internet security companies, which have yet to report, also rose. Internet Security Systems Inc.(Nasdaq:ISSX - news) was up $2.50, or 7 percent, to $32.40 and Network Associates Inc.(Nasdaq:NETA - news), which owns 80 percent of McAfee, was up 57 cents, or 2 percent to $26 in early afternoon trading on the Nasdaq Stock Market. |
