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Symantec 'under pressure' despite strong results

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Tom Espiner ZDNet.co.uk

Published: 01 May 2008 18:12 BST

Symantec has posted strong fourth-quarter and end-of-year results but is still under pressure from other security players, according to analyst firm Canalys.

The security giant posted its end-of-year financial results on Thursday, recording Generally Accepted Accounting Principles (GAAP) measured revenue of $5.874bn (£2.977bn) for the fiscal year. Symantec also posted its fourth-quarter results, with revenue of $1.54bn.

Symantec is showing "overall good health", according to Catalysis principal analyst Andy Buss.

"Symantec has a strong international business, which has isolated any weaknesses in the US market," said Buss. "The company's diversification of products has cushioned any impact on any one aspect of its business and it's getting healthier overall."

Symantec's larger international business — 53 percent of the company's revenues were from international sales and 47 percent from US sales — combined with a weak dollar, has helped the company. However, according to Buss, it's not all been plain sailing for Symantec. The security giant is under pressure from other players in the field, including McAfee and Trend Micro in the US, and Sophos and Kaspersky in Europe.

"All of those companies are doing very well," said Buss. "Kaspersky has pretty aggressively grown out of its German stronghold to move into mid-market deals in the UK and Europe, and each country has been tackled independently. McAfee's doing very well; it keeps adding record quarters and its ePolicy Orchestrator is looked upon positively by businesses. Symantec is under pressure across the board."

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Microsoft is also putting pressure on Symantec with its Forefront Exchange product, which is "doing pretty well", according to Buss, although Microsoft's Forefront Client product has had a slower uptake in businesses. This could change, said Buss, as client security products have a slower sales cycle.

According to Buss, Symantec's trump card is its product diversification, including moves into data-loss prevention, and it flagship Endpoint Protection products. Symantec has also been a "silent yet strong performer" in infrastructure products such as Brightmail, while it stole a march on Trend and McAfee in terms of anti-spam offerings, as those two companies entered the market later. Buss added that Symantec security and compliance products for enterprise had seen 20 percent growth year on year, while its Veritas storage product sales were up by 11 percent.

Symantec's "fork-lift upgrade" on Endpoint Protection means the company is now starting to have "a more compelling end-to-end management story than pure-play enterprise storage-management vendors", said Buss, who added that more predictable release schedules and smaller incremental upgrades from the company would benefit IT managers.