The California-based global leader in security solutions, Symantec Corp. (SYMC) announced yesterday that it has signed a multi-year agreement with the world’s largest PC maker Hewlett-Packard Co. (HPQ). The news of the agreement, which is an extension to the ongoing relationship, actually helped Symantec’s shares rise 51 cents or 3.66% after the market closed yesterday, and gained another 2% today.
As per the terms of the deal, Symantec’s Norton Internet Security software will be installed on HPQ’s desktop, laptop and netbook computers as a 60-day trial subscription.
With the deal in its kitty, Symantec has dealt a blow to its biggest rival McAfee Inc. (MFE), who was one of the contenders for the HPQ deal. MFE had greater chances to bag the deal as it won a similar one from the world’s third largest PC maker Dell Inc. (DELL) last year.
Since Internet security is a growing concern in today’s world, the deal will eventually benefit both Symantec and HPQ.
To better serve its existing clients and procure new ones, Symantec enhanced its Norton security portfolio with the launch of “Norton Everywhere.” The software, which launched last month, provides security for hybrid mobile devices.
This apart, Symantec is also tightening its relationship with channel partners by awarding them Archiving and eDiscovery Specializations. This is basically a tool to get the stronger channel partners more involved with the Symantec ecosystem with the intention of getting more business from them.
Symantec is the largest provider of PC and internet security solutions. Symantec has broadened its focus through a series of acquisitions and a strong product pipeline. Symantec’s new product basket includes Altiris 7.0 and Norton products, which are likely to enhance sales going forward.
With the recent acquisitions of GuardianEdge and PGP Corp., Symantec expanded its addressable security market opportunity and positioned itself as a leader in the fast growing encryption market.
A month ago, Symantec reported net revenue of $1.53 billion in its fiscal fourth quarter, up 3.0% from the year-ago quarter. Reported earnings per share of 40 cents exceeded the Zacks Consensus Estimate by 7 cents. The strong product portfolio, growth prospects in all its served markets and successful acquisitions helped Symantec to beat the Street’s expectations.
Based on its customer win momentum, high demand for security solutions and strong product pipeline, Symantec provided strong first quarter guidance.
Though we believe that the HPQ deal will help Symantec to continue its recent momentum, competition from EMC Corp. (EMC), McAfee Inc. and Microsoft Corp. (MSFT) remains a concern.
We maintain our short term Hold recommendation for the stock.
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