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Executives at security solutions provider Symantec said theyre confident that the companys business will continue to thrive in the face of Microsofts Windows XP Service Pack 2, and they promised a comprehensive anti-spyware package in the next few weeks.
In a conference call Wednesday announcing the companys earnings for the second fiscal quarter, executives said Symantecs revenues had increased dramatically from the same period last year, even lacking the presence of a big-name worm that would energize sales. Revenue also should increase heading into what is historically the strongest part of the year, they said.
Cupertino, Calif.-based Symantec Corp. reported net income of $136 million, a 64 percent increase over the $83 million the company reported for the same quarter a year ago. Symantec posted revenue for the quarter of $618 million, which increased 44 percent over the $429 million it reported last year.
“Weve done OK; we could have done better, but Im pleased with our performance especially in what appears to be pretty tough times for the market,” John Thompson, Symantecs chairman and CEO, said in the conference call with analysts.
The Blaster worm last year highlighted many companies security weaknesses, Thompson said. Although Symantec did not have a worm such as Blaster to hold up as an example this year, the companys sixth Internet Threat Report revealed 4,500 new worms and viruses—4.5 times the amount discovered last year, he said.
Symantecs worldwide enterprise business represented 49 percent of the total revenue and grew 29 percent year over year; of that, enterprise security produced 36 percent of the companys revenue, while administration and services represented 11 percent and 2 percent, respectively.
Thompson said the services environment remains unsettled, with companies trying to buy their way into the market and using pricing as a lever. Symantecs consumer business, meanwhile, made up the remaining 51 percent of the revenue.
Thompson said he intends to make those figures hold up, even in the face of Microsofts Windows XP SP2 (Service Pack 2), which contains security features such as an integrated firewall. Microsoft has said it intends for SP2 to serve merely as a basic defense, and has encouraged OEMs to use third-party products such as Symantecs Norton Security Center to further secure their PCs, which they have done.
Microsofts new religion of security can only help Symantec, as it encourages customers to seek out means of securing their PCs, Thompson said. Symantec will feel “no impact” from the release of SP2, he said. “Theres an old adage: You get what you pay for,” Thompson said of the free SP2 upgrade. “It will be hard to believe that the Microsoft release will cause people to turn their back and stop trusting us,” he added.
“With respect to Norton Security Center, I think the fact that were preloaded on machines by several of the top OEMs speaks to the relationship that we have with them as well as the functional advantages of the technology,” Thompson said, when specifically asked about decisions by Dell and others to preload the Symantec software. “I would expect that Microsoft will continue to enhance the product, and our challenge is that we need to continue to outrun them.”
Symantecs hardware firewall business is also prospering, executives said. The companys 5400 firewall appliance experienced 43 percent sequential growth, and its 300 Series appliances have seen revenues grow by 300 percent since June.
This quarter, Symantec plans to introduce the 400 Series appliances, expanding the focus into the remote branch office and delivering all of the 300 Series capabilities together with central-management functionality, Thompson said.
In response to an analyst question, however, Thompson said the company has identified spyware as the next target market. Symantecs security products detect spyware but dont do an adequate job of remediation or removal.
“While we have some detection today, youll see a broader offering in the very, very near future,” Thompson said, both in the consumer and in the enterprise space. Spyware remediation is the No. 1 issue in both consumer and enterprise markets, he said.
That launch could come as part of a marketing effort Symantec intends to launch next week emphasizing the need for security and availability of digital information, Thompson said. “We must trust the integrity of the information we come to rely on to make important business and personal decisions,” he said.
Moving forward, integration will be the name of the game. The companys acquisition of Brightmail will be folded into Symantecs other products over time, and Thompson explained that integration was the motivator for increasing the price of Symantecs Norton consumer suite of anti-virus products, which grew 143 percent in revenue year over year. The decision was made “to convince our customers to raise the value of our suite, and we did for them for their own protection,” Thompson said.
“As we head into what is traditionally the strongest half of our fiscal year, we are very confident in our outlook,” he said.
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