Symantec stock plunges after weak outlook

Symantec (SYMC) reported a narrower loss in the fourth quarter helped by an increase in the demand for cybersecurity-related products. Adjusted earnings and revenue came in above Street’s expectations. However, the company’s stock dropped 16% in the extended hours after first-quarter and full-year 2019 sales and profit outlook that was below consensus estimates.

The company’s loss narrowed to $35 million or $0.06 per share from $143 million or $0.23 per share last year. Adjusted EPS climbed 64.3% to $0.46. Revenue grew by 10% to $1.22 billion, as a 33.6% jump in revenue from Consumer Digital Safety offset a 7% dip in Enterprise Security. Non-GAAP implied billings climbed 17.1% to $1.6 billion.

Mountain View, California-based cybersecurity company’s top line benefited from its continuous efforts to strengthen its product suite, helped by a jump in demand for cybersecurity-related products. Its recent security enhancement for Microsoft’s (MSFT) Azure and Office 365 products added value to Symantec’s product suite.

In addition, acquisition initiatives have been the main priority for Symantec that helped in lowering the company’s dependency on the PC market and enhance its position in the enterprise security market.

Looking ahead into the non-GAAP number of the first quarter of 2019, the company predicts revenue of $1.135-$1.165 billion, operating margin of 26-28% and EPS of $0.31-$0.35. For fiscal 2019, on a non-GAAP basis, Symantec expects revenue of $4.76-$4.90 billion, operating margin of 30-32% and EPS of $1.50-$1.65.

The company’s board of directors also declared a quarterly cash dividend of $0.075 per common share. The dividend is payable on June 20, 2018, to shareholders of record as of June 8, 2018.

The audit committee has begun an internal investigation, which is in its early stages, in connection with concerns raised by a former employee and plans to provide additional information to the SEC as the investigation proceeds. The Audit Committee has retained independent counsel and other advisors to assist it in its investigation.

Based on the outcome of the Audit Committee investigation, the company’s financial results and guidance may be subject to change. Symantec added that there might be a delay in filing the annual report for the fiscal year ended March 30, 2018, due to this investigation.

Shares of Symantec ended Thursday’s regular trading session up 1.50% at $29.18 on the Nasdaq. The stock had been trading between $24.93 and $34.20 for the past 52 weeks.