symantec

Businesses will likely spend more on software this year, as the global economy continues to recover. That’s good news for two market leaders we cover regularly in our advisory on U.S. stocks, Wall Street Stock Forecaster. We analyze which is in a better position to benefit as more companies adopt cloud computing. Note: This article updates our recent report on Symantec, issued just after the company had fired its CEO (see the article here). ADOBE SYSTEMS INC. (Nasdaq symbol ADBE; www.adobe.com) earned $151.3 million, or $0.30 a share, in its fiscal 2014 first quarter, which ended February 28, 2014. That’s down 14.9% from $177.9 million, or $0.35, a year ago. Revenue fell 0.8%, to $1.00 billion from $1.01 billion. The declines are mainly because Adobe is now selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription instead of a one-time purchase. That hurts the company’s short-term growth, but it should provide stable revenue streams as more users switch over. Subscriptions now supply over half of Adobe’s revenue....

Businesses will likely spend more on software this year, as the global economy continues to recover. That’s good news for these market leaders, but Symantec’s focus on security puts it in a better position to benefit as more companies adopt cloud computing. ADOBE SYSTEMS INC. $65 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 497.7 million; Market cap: $32.4 billion; Price-to-sales ratio: 8.3; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) earned $151.3 million, or $0.30 a share, in its fiscal 2014 first quarter, which ended February 28, 2014. That’s down 14.9% from $177.9 million, or $0.35, a year ago. Revenue fell 0.8%, to $1.00 billion from $1.01 billion. The declines are mainly because Adobe is now selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription instead of a one-time purchase. That hurts the company’s short-term growth, but it should provide stable revenue streams as more users switch over. Subscriptions now supply over half of Adobe’s revenue....

RUSSEL METALS $33.17 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.0 million; Market cap: $2.0 billion; Dividend yield: 4.2%) reports that its revenue rose 12.4% in the quarter ended March 31, 2014, to $924.0 million from $821.8 million a year earlier. Earnings gained 33.6%, to $29.0 million, or $0.47 a share. A year earlier, the company earned $21.7 million, or $0.36. Russel holds cash of $86.3 million, or $1.41 a share. Its long-term debt of $458.3 million is a reasonable 22.0% of its market cap. The stock yields 4.2%. The company gets about 35% of its revenue from customers in the oil and gas drilling industry. That, plus its exposure to fluctuating steel prices, adds risk. However, Russel’s long-term outlook remains positive, and it is well-positioned to gain as the economy recovers....

MONDELEZ INTERNATIONAL INC., $37.96, Nasdaq symbol MDLZ, took its current form on October 1, 2012, when the old Kraft Foods Inc. broke itself into two publicly traded companies: Mondelez, which focuses mainly on snack foods, and Kraft Foods Group, which makes a variety of grocery products. The stock rose 7% this week after Mondelez agreed to merge its packaged coffee business with European coffee maker D.E. Master Blenders. (In June 2012, the old Sara Lee Corp., a former recommendation of ours, spun off D.E. Master. It later accepted a friendly takeover offer from Joh A Benckiser, a privately held German firm.)...

SHERRITT INTERNATIONAL CORP., $4.60, symbol S on Toronto, has fended off an attempt by activist investor George Armoyan and his firm, Clarke Inc. (symbol CKI on Toronto), to place three of its nominees on Sherritt’s board of directors. Together, they would have held a third of Sherritt’s nine board seats. Shareholders voted against the new directors at the company’s annual meeting on May 6. Meanwhile, Armoyan has put forward a number of proposals for Sherritt to cut costs, reduce its debt and better align what he sees as the interests of shareholders, management and the board directors....

SYMANTEC CORP. $21.41 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 691.6 million; Market cap: $14.7 billion; Dividend yield: 2.8%) reports that its revenue fell 5.6% in its fiscal 2014 fourth quarter, which ended March 28, 2014, to $1.65 billion from $1.75 billion a year earlier.

However, earnings per share rose 6.8%, to $0.47 from $0.44, mainly due to savings from a new restructuring plan that includes job cuts and simplifying the company’s product lines.

Symantec now expects to earn $1.84 to $1.92 a share in fiscal 2015, which is higher than the consensus estimate of $1.83. The stock trades at just 11.4 times the midpoint of that range, mainly due to investor uncertainty after Symantec fired its CEO over the slow progress of its restructuring.

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SYMANTEC CORP. (Nasdaq symbol SYMC; www.symantec.com) sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software. In Symantec’s fiscal 2014 third quarter, which ended December 27, 2013, its earnings per share rose 13.3%, to $0.51 from $0.45 a year earlier. The gains were mainly due to savings from a new restructuring plan that includes laying off 30% to 40% of its managers and simplifying its product lines....

SYMANTEC CORP. $20.76 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 691.6 million; Market cap: $14.3 billion; Dividend yield: 2.9%) sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. It also offers data-archiving software. In Symantec’s fiscal 2014 third quarter, which ended December 27, 2013, its earnings per share rose 13.3%, to $0.51 from $0.45 a year earlier. The gains were mainly due to savings from a new restructuring plan that includes laying off 30% to 40% of its managers and simplifying its product lines. Revenue fell 4.8%, to $1.7 billion from $1.8 billion. That’s mainly because the company is retraining its sales staff as part of its restructuring, and that disrupted their closing of new deals. Slow computer sales have also hurt demand for anti-virus software....

PLEASE NOTE: Due to the Good Friday holiday, our next Hotline will go out on Thursday, April 17, 2014. PROCTER & GAMBLE CO., $80.76, New York symbol PG, is selling most of its pet food business to privately held Mars Inc. Under the deal, Mars will get the right to make Iams, Eukanuba and Natura pet foods in North America and Latin America, which supply 80% of these brands’ sales. Procter aims to sell its remaining pet food operations in Europe and elsewhere, probably in the next few months. That will let it focus on its more-profitable household and personal care products....

PLEASE NOTE: Due to the Good Friday holiday, our next Hotline will go out on Thursday, April 17, 2014. YAMANA GOLD INC., $9.37, symbol YRI on Toronto, teamed up with Osisko Mining (symbol OSK on Toronto) last week to thwart a hostile takeover bid by Goldcorp (symbol G) for Osisko. Yamana bid $1.4 billion in cash and shares for 50% of Osisko, which owns the Canadian Malartic mine in Quebec. Canadian Malartic produced 475,277 ounces of gold in 2013. However, Goldcorp has now raised its bid to $3.6 billion in cash and shares for all of Osisko. The Yamana offer, combined with contributions from two of Canada’s largest pension funds in the form of a loan and the purchase of a 37,500-ounce-per-year gold stream, valued Osisko at $3.4 billion....