Earnings Numbers Take a Dip for Symantec and Others

There was no hiding the ugly quarterly numbers this past week from storage industry leaders such as EMC, VMware and Symantec. All reported that their profit margins were down substantially, with Symantec’s dropping the most precipitously at 58 percent.

The Cupertino, Calif.-based storage and data protection company is doing fine on the consumer side, but its Veritas-branded enterprise storage business—which represents the largest section of the company’s overall income—was down 17 percent year over year in adjusted revenue.

For the fiscal year, Symantec’s security and compliance business revenue was down 15 percent, services were down 20 percent, and consumer products (mostly Norton Utilities-related) was off by 5 percent. With a few fractions, it adds up to 58 percent in the red for FY’09.

New CEO Enrique Salem walked into a tough role when he replaced retiring CEO John Thompson last spring. Nonetheless, Salem seemed pretty upbeat about his company’s financials, noting on the quarterly conference call July 29 that the SMB market is where Symantec needs to make major gains in the quarters ahead.

“Our products are good, our partners are good, the [product] reviews have been good, and now it’s a matter of closing the business,” Salem said.

The biggest problem with the enterprise storage software and services business in general, Salem said, is that customers are buying shorter licenses.

“I don’t really expect people to be buying years 2 and 3 anytime soon,” he said. “I just don’t see a big change there—well, maybe we’ll see a little difference in December.

“We’re already in every major account in the world; we just need to get more of our portfolio into those systems,” Salem said.

A few months after Windows 7 goes GA on Oct. 22, there will be some system updating that could benefit Symantec and other storage/security providers.

“We’ll be in a good position, with our Altiris [access management] products, to obtain benefits from that migration early next year,” Salem said.

We certainly all are hoping that the storage business will be in a better position by early next year. These quarterly numbers aren’t very nice.