Gain a global perspective on the US and go beyond with curated news and analysis from 600 journalists in 50+ countries covering politics, business, innovation, trends and more.<doc-sep>Logo of jester cap with thought bubble. Image source: The Motley Fool. Symantec Corp (NASDAQ: SYMC) Q4 2019 Earnings Call May. 9, 2019, 5:00 p.m. ET Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: Operator Good day, ladies and gentlemen. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to Symantec's Fourth Quarter and Full Year Fiscal Year '19 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's prepared remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I'd now like to turn the call over to the Vice President of Investor Relations, Ms. Cynthia Hiponia. Ma'am you may begin. Cynthia Hiponia -- Vice President, Investor Relations Thank you, Ian, and good afternoon. This is Cynthia Hiponia, Vice President of Investor Relations at Symantec, and I'm pleased to welcome you to our call to discuss our fourth quarter and full year fiscal 2019 earnings results. We posted the earnings materials to our IR events webpage. Speakers on today's call are Rick Hill, Symantec's Interim President and CEO and Nick Noviello, our Executive Vice President and CFO. This call will be available for replay via the webcast on our website. I'd like to remind everyone that all references to financial metrics are non-GAAP, unless otherwise stated. Please refer to the supplemental materials posted on the IR website for further definitions of our non-GAAP metrics. Please note, non-GAAP financial metrics referenced during this call are reconciled to their comparable GAAP financial measures in the press release and supplemental materials posted on our website. We belive our presentation of non-GAAP financial measures when taken together with corresponding GAAP financial measures provide meaningful supplemental information regarding our operating performance for reasons discussed below. Our management team uses those non-GAAP financial measures in assessing our operating results, as well as when planning and forecasting future periods. Story continues We believe our non-GAAP financial measures also facilitate comparisons of our performance to prior periods and that investors benefit from understanding our non-GAAP financial measures. Non-GAAP financial measures are supplemental and should not be considered as substitute for financial information presented in accordance with GAAP. Also, please note, we have changed the name of our Consumer segments to Consumer Cyber Safety. Today's call contains forward-looking statements based on conditions as we currently see them. Those statements are based on current beliefs, assumptions and expectations, speak only as of the current date, and as such, involve risks and uncertainties and actual results to differ materially from current expectations. Please refer to the cautionary statements in our press release for more information. You will also find a detailed discussion of our risk factors in our filings with the SEC, and in particular in our annual report on Form 10-K for the fiscal year ended March 30, 2018 and our recently filed quarterly reports on Form 10-Q. With that, let me now turn the call over to Rick. Richard S. Hill -- Interim President and Chief Executive Officer Thank you. Cynthia. Good afternoon, ladies and gentlemen, and thank you for joining the Symantec fiscal year 2019 fourth quarter and year-end conference call. It's a pleasure to be with you this afternoon, and it's even a greater pleasure to be asked by Greg Clark, Dan Schulman, and the entire Symantec Board of Directors to pitch for the team during the transition in leadership within the Symantec. As I said in the Board meeting and will continue to say within the company and to you, our investors, Greg Clark has been the visionary for Symantec over the last three years. The Board with Greg embarked on a project to transform Symantec into the global leader in cyber security it has become today. Though key -- through key acquisitions and divestitures, Greg, Nick and the management team have transformed Symantec into a company prepared to defend and defeat global cybercrime, cyber espionage and cyber terrorism perpetrated on our employees, our customers and shareholders worldwide. Symantec has a long heritage of making the world a safer place. You'll hear more about just how we do that on this call and in the quarters ahead, while I'm on the pitching mound. By the way, Greg asked me, if I could use a rugby or soccer analogy, so could relate, but unfortunately I grew up on the south side of Chicago and we've never played those sports. So, Greg, if you're still listening, you have to adapt. Now let's talk a little about me and how I got into my role at Symantec. A year ago, Symantec began an investigation that happily resulted in our albeit late fiscal year '18 10-K filing with no adverse material findings. Around the start of the investigation, I had reached out to a Board member of Symantec to offer my assistance. Several weeks later, unbeknownst to me, Peter Feld, Managing Partner at Starboard, a friendly activist investor reached out to Greg Clark and the Symantec's Board to see if they could help. Peter went to his bullpen for a left-handed pitcher and voila, I'm here. Since late October, I began to work with Greg, his team and the Board as an advisor. In early April, Greg introduced me to the Symantec field organization and in late April, indicated he had personal issues he needed to attend and wanted to spend more time with his aging father. The Board subsequent to that event asked me -- asked the Board for volunteers from the Board, who could step into the role, while a thorough search was conducted to a permanent CEO. As I had personally pitched to few innings at the Marvell Technology Corporation as Interim CEO, the Board selected me to fill in here. Having had the opportunity to see inside the company, meet the great people and see the great opportunity, the Board approved me as interim CEO at the Tuesday Board meeting, and here I am today. As many of you know me as the long-tenured Chairman and CEO of Novellus Systems and others as the Chairman and CEO of Marvell turnaround in 2016, which resulted in the hiring of a great first time CEO, Matt Murphy. There are many similarities between Marvell and Symantec which make me ideal for the interim CEO role. Just like in Marvell, I take an active role as of day one, as you can see by me doing the conference call. Rest assured, I'm confident and prepared to operate this Company without missing a heartbeat. As Peter Feld warned the entire Board, Rick is not afraid to break glass. I'm sure the executive staff can confirm this in just the last few days working with me to do this conference call. Simultaneously, we are announcing Vincent Pilette, former CFO of Logitech, as the new CFO of Symantec. Interestingly enough, I previously tried to recruit Vincent into another situation. So I know him, respect him and I'm confident you'll be delighted with him as our CFO. I certainly am. I would like to share a short story with you about Vincent. A couple of weeks ago, Sue Barsamian and I, at the request of the Board, were meeting with the executive staff and others in the Board room, where I was expressing my views on the importance of all the management having the fundamental skill of financial alacrity. Sue said to me, what's that mean? Well, on last Sunday, when Sue and I again were meeting with the executive staff, this time with Vincent Pilette present, I asked Vincent if he would like to say a few words to the Group. He jumped up and in his deep Belgian accent, well, of course. He grabbed a marker and a flipchart and began to outline the financial model for the Company in real time. As he captivated the staff, I returned to Sue and said, that is my definition of financial alacrity. You will all be very pleased. This is Nick's last conference call. He's been an outstanding resource for me, and while I will miss seeing him at Symantec, I'll still see him at church when my wife drags me reluctantly there on Sundays. Another interesting color fact on Nick you probably don't know is even at church, Nick is involved with money. He has a collection basket on a long pole that he uses to get the parishioners in the pews to put their donation into. And just like here at Symantec, when he gets to me as I put the money in the basket, if he thinks I have more to give, he hits me two times in the chest with the basket. Now, that is a CFO. Nick, thank you for all you have done for Symantec customers, employees and shareholders. We will miss you. Now, both Vincent and I thank you, Nick, for the strong financial team you've established at Symantec and we'll build from that strength. Both Vincent and I are both keenly aware that growth and profitability are vital to sustainable high-tech companies, and our track records and results in delivering shareholder value in that type of environment is well-known and documented. A couple of my proudest accomplishments in my career are developing Tim Archer, current CEO of Lam Research into the best CEO in the semiconductor capital equipment industry, and also plucking Matt Murphy from Maxim Semiconductor, and installing him as a first-time CEO of Marvell Technology. They both make me very proud, and I suspect the same thing can be done here at Symantec. So I not only can develop horses, I can pick them as well. So stay tuned. So why would Rick Hill, a retired semiconductor equipment company Chairman and CEO for nearly 19 years come out of retirement from his daily downward dog poses? The answer is quite simple. The vision that Greg Clark and his team had painted for me for Symantec in an exponentially growing need for integrated cyber defense and cyber safety by every human, business and institution on the planet, period. Being from the south side of Chicago, I have to go to Google and then use my reverse Polish HP 35 calculator who, for all of you that even know what that is, to realize Symantec plays in a market of roughly $760 billion. If Symantec could get every human on the planet to buy a subscription to our Symantec Norton LifeLock family protection plan, and every corporation to install Symantec Integrated Cyber Defense technology to protect our data and identity and our right to be forgotten, the world would be a much safer place. Unfortunately, we live in a world with unscrupulous people living among us. During my first night in Aviation Officer Candidate School in Pensacola, Florida, in the early '70s, Marine Drill Instructor Staff Sergeant/Lt Kwiatkowski (ph) words ring true in my ears today. He said to me, maggot, if you would keep your bleeping footlocker locked, we wouldn't have criminals. It's your fault we have people in jail today. So I'm asking all of you on the phone to go home and lock your family cyber footlocker by joining the Symantec consumer family and go to your CIOs and CSOs and ask them to call Symantec Enterprise solutions to ensure our corporate footlockers are protected by Symantec's Integrated Cyber Defense. Now hopefully by the end of this call, you'll see that this semiconductor industry executive relief pitcher picked by the Board and Greg Clark, is quite capable on helping the executive management team execute and enhance their ability to deliver world-class cyber defense products and the best price performance value to yield the best return for our customers, employees, and equally important, you, our shareholders. So let's talk about the business. First, let me tell you what you probably already know. I'm a straightforward, clear communicator. If I feel disappointment in the number and I think it is bad, I'll tell you that and what we're going to do to fix it. I accepted this role because Greg and the management team convinced me we had solid industry-leading products with more on the way. I have verified that is true.<doc-sep>
Symantec Corp. shares dropped Friday for their worst performance in a year as analysts slashed price targets and estimates for the security software company that turned in another poor performance and outlook and shook up its top management ranks. Symantec US:SYMC shares dropped more than 13% to $19.18 at least check, having touched an intraday low of $17.89, for their worst day in a year, when the stock dropped 33% after the company’s year-ago fiscal fourth-quarter earnings report and internal audit. In comparison, the S&P 500 index SPX, +0.19% was down 0.5% and the tech-heavy Nasdaq Composite Index COMP, +0.59% was down 0.8%. Not only did Symantec post an earnings miss and a disappointing outlook late Thursday but also it abruptly announced that Chief Executive Greg Clark was leaving immediately and that Chairman Richard Hill would fill the position on an interim basis. Also, Symantec named former Logitech chief financial officer Vincent Pilette as its permanent CFO. While personal reasons were cited for Clark’s departure, many analysts took that story tongue-in-cheek given the volatile history of the company’s performance and management tenure. Stifel analyst Gur Talpaz, who has a hold rating and a $20 price target, called referred to it as “The Game of Musical Chairs Begins Anew.” “For those of you who have followed the Symantec story for some time, you’re likely familiar with the company’s history of changing leadership, dating back to the passing of the baton from John Thompson to Enrique Salem in 2009,” Talpaz said. “Since then, it’s been a revolving door at the top, though Greg Clark was able to hold onto the seat for nearly three years,” Talpaz said. “As Symantec begins the search for a new top executive, we would encourage the company to find a leader who can, first and foremost, inspire some measure of confidence with both customers and partners, particularly as new competing solutions emerge at a rapid rate.” Of the 29 analysts who cover Symantec, two have buy ratings, 24 have hold ratings, and three have sell ratings. Of those, nine lowered their price targets, resulting in an average target of $20.90. Analysts slashed their estimates to a consensus 34 cents a share on revenue of $1.19 billion for the fiscal first quarter, from a previous consensus of 40 cents a share on revenue of $1.2 billion. For the year, the consensus dropped to earnings of $1.71 a share on revenue of $4.84 billion, from a previous $1.77 a share on revenue of $4.97 billion. Wedbush analysts Daniel Ives, who has a neutral rating and lowered his price target to $19 from $24, said the weakness in earnings came as a surprise. Before the announcement late Thursday, Symantec shares had been up 17% for the year, slightly better than the S&P 500. “Last night SYMC reported FY4Q earnings that saw considerable enterprise weakness on company specific demand/execution issues that will be shocker to the Street given the company appeared to turn the corner over the last few quarters and was humming in the eyes of investors until they drove into a brick wall last night,” Ives said. Raymond James analyst Michael Turits, who has a market perform rating, said the management change was welcome.● “Given what has been uneven performance under the former management team and what we viewed as unrealistic guidance for F20, we’re pleased the board has ‘cleared the decks’ with a new CFO, still to be named CEO, and lower, if not (given guidance to consumer acceleration and ongoing enterprise risk) completely ‘derisked’ F20 guidance in our view,” Turits said. Jefferies analyst John DiFucci, who has a hold rating and lowered his price target to $19 from $22, said there seems to still be risk in the company’s lowered guidance. “Notably for F20, the enterprise expectations for $2.3B to $2.4B still imply flat organic cc growth, compared to F19’s 2.5% decline, not to mention that this business segment has not grown on an organic, constant currency basis in more than five years,” DiFucci said. “Expectations for consumer growth remained the same as the prior Q, with guidance of $2.46B to $2.5B implying 3% yoy organic cc grow which is in-line with F19’s growth of 3%.” “While it is more reasonable than the prior few Q’s expectations, we question the company’s ability to achieve such a turnaround in growth in Enterprise over the coming quarters given prior history,” DiFucci noted.