SYMANTEC CORP. $22.70 - Nasdaq symbol SYMC

SYMANTEC CORP. $22.70 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 696.6 million; Market cap: $15.8 billion; Dividend yield: 2.6%) sells computer security technology, including anti-virus and emailfiltering software, to businesses and consumers. It also offers data-archiving software.

In its fiscal 2013 third quarter, which ended March 29, 2013, Symantec’s earnings per share rose 15.8%, to $0.44 from $0.38 a year earlier. Revenue gained 4.4%, to $1.75 billion from $1.68 billion.

The company is poised to keep reporting higher earnings as its new restructuring plan takes effect.

Under this initiative, Symantec is laying off 30% to 40% of its managers and streamlining its product lines. This should increase its gross profit margin (gross profits as a percentage of revenue) from 25.7% in fiscal 2013 to at least 30% in fiscal 2015.

In addition, Symantec currently spends about 15% of its revenue on research, and the plan should free up additional cash for this purpose. This spending hurts the company’s earnings but helps it quickly respond to new computer viruses and other online threats. That’s particularly important as more businesses shift their sensitive data to a cloud-computing environment.

Symantec’s strong balance sheet will help it complete this transition. As of March 29, 2013, its longterm debt was $2.1 billion, or just 13% of its market cap. It also held cash and investments of $4.7 billion, or $6.80 a share.

The company has just started paying a dividend. The quarterly rate of $0.15 a share gives it a 2.6% yield.

Symantec is a buy.

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