Symantec (NASDAQ:SYMC) announced its Q3 FY12 earnings last week with revenues of $1.725 billion last quarter, up 7% year-over-year. [1] Its revenue growth was driven primarily by revenue from security software for businesses increased 17% year-over-year. On the other hand, revenue from consumer security software and storage software increased only 5% and 3% respectively, weighing on revenue growth. Symantec also managed to improve its overall gross margin to 84.2%. Following the results, we have revised our Trefis price estimate for Symantec to $21.60, which stands nearly 20% above the current market price. Symantec competes primarily with Intel (NASDAQ:INTC) via McAfee in security software and IBM (NYSE:IBM), EMC (NYSE:EMC), HP (NYSE:HPQ) and NetApp (NASDAQ:NTAP) in storage software.
Check out our complete analysis of Symantec.
Security Software for Businesses to Continue to Drive Revenue Growth
We expect enterprise security software for businesses to continue to drive revenue growth for Symantec in the coming years with revenue expanding much faster than Symantec’s other businesses. Symantec’s recent LiveOffice acquisition could help it generate additional revenue from enterprise security software.
We expect Symantec’s market share in enterprise security software to increase marginally through the forecast period, but the absolute revenue will increase much faster as the global market for enterprise security software grows to nearly $7.4 billion by the end of the forecast period.
Storage Software Market Crucial for Symantec
Storage software is Symantec’s most valuable business, accounting for a major portion of its overall Trefis value estimate. Symantec lost some market share in the global storage software market in 2011, due to increasing competition by EMC and IBM. We expect it to gain marginal amounts of market share during the forecast period backed by new releases and upgrades to its existing products.
Consumer Security Software
Consumer security software continues to account for a major slice of Symantec’s total revenue. Symantec managed to increase its market share marginally in the consumer antivirus market in 2011, but is expected to lose some market share in the coming years. Symantec launched Norton for multiple mobile and tablet platforms, which should drive growth going forward. We expect the global consumer antivirus and security market to continue to grow steadily in the coming years, and Symantec to maintain its lead in this space.
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