What To Expect From Symantec’s Q3 And Fiscal 2019

Symantec (NYSE:SYMC) reports its fiscal third quarter earnings on January 31. In light of the noise surrounding the company, the Q3 earnings will be an important platform for management to shed some more light on issues from the resignation of the COO to a rumored acquisition by Thoma Bravo.

We currently have a price estimate of $21 per share for Symantec, which is slightly higher than the current market price after the modest rally in recent weeks. Our interactive dashboard on Symantec’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

While Q2 revenues declined on the back of product divestitures, the impact of those divestitures in the Enterprise Security business are likely to be felt in Q3 as well. In addition to the commentary on the operational performance, there are a whole host of issues that are likely to hog the spotlight:

• COO’s Exit: On November 29, Michael Fey, President and COO resigned with immediate effect. The intriguing aspect of this executive departure was that the company did not provide any additional information, allowing rumors and speculation to run rampant.
• Acquisition Rumors: In November, rumors had surfaced regarding Thoma Bravo approaching Symantec about a possible buyout. Given Symantec’s Audit Committee assessment of certain transactions, the stock price had already fallen significantly. These rumors, coupled with the presence of activist investor Starboard Value on the company’s board, led many investors to believe that a deal was possible. While management did not comment on market rumor, the CEO expressed expectations of beating the company’s Q3 guidance. In December, Thoma Bravo was rumored to also be interested in buying McAfee from TPG and Intel.
• Corporate governance: Following the completion of the Audit Committee investigation, the company has also refreshed its board. Sue Barsamian (ex-EVP, Chief Sales and Marketing Officer of Hewlett Packard Enterprise Software) and Rick Hill (Chairman, Marvell Tech and board member at Arrow Electronics) have joined Symantec’s board as independent directors.

Also of interest will be management commentary around the company’s vision for its partnership with Fortinet to integrate Fortinet’s Next-Generation Firewall capabilities into Symantec’s Web Security Service.

Do not agree with our forecast? Create your own price forecast for the Symantec by changing the base inputs (blue dots) on our interactive dashboard.