Symantec Forms Alliance Network - Analyst Blog

California-based global leader in security solutions, Symantec Corp. (SYMC) recently set up an alliance network to support its channel partners in generating new business. The alliance network, which is a joint effort of Symantec and certain alliance partners, will develop innovative marketing solutions for channel partners.

Tech giants such as Dell Inc. (DELL), Hewlett-Packard Co. (HPQ), ExaGrid and Quantum have already listed themselves as members of the alliance. The members of the alliance program will be able to sell Symantec’s products along with their own. This will improve the partners’ customer penetration and boost profitability through selling incentives.

Symantec’s marketing alliance will enrich its channel partners’ offerings. The company will also provide necessary training and tools for a better understanding of customers’ IT needs. It is expected that this would help partners in catering to customer needs, thus enhancing customer satisfaction, which in turn will result in increased profits.

However, as of now, this alliance network is available only to the members located in North America. Going forward, we believe that more channel partners will join the alliance program to reap the benefit of financial incentives and additional customer reach. This, in turn, will enable Symantec to generate strong and sustainable revenues with solid contribution from its channel partners across the world.

Apart from this, we are encouraged by Symantec’s continuous endeavors at enhancing storage management and security solutions. Organizations all over the world are increasingly being lured into adopting the company’s solutions to better manage and secure their information-driven businesses.

However, fierce competition from bigger players could limit Symantec’s share gain in storage and security software markets, leading to a modest downside to stock prices. The recent acquisition of McAfee Inc. (MFE) by the semiconductor giant Intel Corp. (INTC) could fuel competitive pressure in the security software space. Moreover, we believe that Symantec’s senior unsecured notes offering of $1.1 billion could increase investor concerns in the near term, since some analysts have reduced their earnings estimates after considering additional interest expenses. We therefore have a short-term Strong Sell recommendation (Zacks #5 Rank) on Symantec shares.

However, given the company’s leading market position and the increasing demand for security solutions, our longer-term rating remains Neutral.