symantec

SYMANTEC CORP. $15.09 (Nasdaq symbol SYMC; SI Rating: Average) (408-517-8000; www.symantec.com; Shares outstanding: 821 million; Market cap: $12.4 billion) reports that its revenue fell 4.7% in the three months ended April 3, 2009, to $1.47 billion from $1.54 billion. The recession drove down sales of computer-security and backup software to small businesses during the quarter. This was the main reason for the company’s revenue drop. Still, profits rose despite the fall in overall sales, largely because Symantec has done a good job of controlling its costs. The company’s $2.1-billion long-term debt is a low 17% of its market cap. It also holds cash of $2 billion, or $2.40 a share....

MASTERS ENERGY, symbol MSY on Toronto, has officially been taken over by ZARGON ENERGY TRUST, $15.95, symbol ZAR.UN on Toronto. Zargon was able to get a majority of Masters’ shareholders to vote in favour of its cash-and-unit offer at a meeting last week. Masters shareholders will get $0.37 a share in cash, plus 0.0957 of a Zargon unit. (The unit portion is based on the 1.475 million new units Zargon is issuing as part of the offer.) At Zargon’s current price, that’s worth a total of $1.90 per Masters share, a gain of over 64% from before the offer. In all, buying Masters will cost Zargon $41.4 million. Masters will add 1,275 barrels of oil equivalent per day to Zargon’s production. Zargon now expects its production to average 10,200 barrels per day this year....

BANK OF AMERICA CORP., $14.17, New York symbol BAC, rose over 50% this week despite the fact that it needs to raise $33.9 billion in additional capital to satisfy government regulators. That’s equal to 37% of the bank’s $90.7-billion market cap. The Federal Reserve has evaluated the 19 largest U.S. banks to see how well they would cope if unemployment continues to rise and home prices keep falling. Such an environment would surely produce higher loan losses, and the aim of this “stress test” is to identify the banks that would have the most difficulty absorbing these. Bank of America failed this test, so it will have to strengthen its balance sheet. There are a number of ways it could do this, including converting its preferred shares to common shares, although this would significantly dilute the holdings of its existing shareholders. As well, the U.S. government holds $45 billion worth of Bank of America’s preferred shares, so converting them to common shares would give the government more control over the bank....

ADOBE SYSTEMS INC. $21.35 (Nasdaq symbol ADBE; SI Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 524.2 million; Market cap: $11.2 billion) makes software that lets computer users easily create, edit and share documents in the popular PDF format. Graphic designers also use Adobe’s software to create print publications and web pages. In the three months ended February 27, 2009, Adobe’s revenue fell 11.7%, to $786.4 million from $890.4 million. Earnings per share, excluding one-time items, fell 6.3%, to $0.45 from $0.48. In the quarter ending May 31, 2009, Adobe expects to report earnings per share of between $0.31 and $0.38 on revenue of about $700 million....

AUTODESK INC. $14 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 226.3 million; Market cap: $3.2 billion; Price-to-sales ratio: 1.4; WSSF Rating: Average) makes computer-assisted design software that lets engineers and architects visualize, simulate and analyze the performance of their products early in the design process. This saves time and money, and improves the quality of the finished product. Slowing construction activity has hurt demand for Autodesk’s products. In response, the company plans to cut 10% of its workforce and consolidate some of its facilities. Severance and related expenses will cost it $65 million to $75 million. These cost-cutting plans should lower its annual expenses by $130 million. To put these figures in perspective, Autodesk earned $0.45 a share, for a total $104.5 million, in its third fiscal quarter, ended October 31, 2008, up 28.6% from $0.35 a share, or $84.8 million a year earlier. If you disregard a number of non-recurring expenses and gains, earnings per share rose 14.3%, to $0.56 from $0.49. Revenue improved 12.8%, to $607.1 million from $538.4 million. These gains were largely the result of favourable foreign exchange rates and strong sales in emerging markets. International sales account for about 80% of Autodesk’s revenue....

SYMANTEC CORP. $14 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 821 million; Market cap: $11.5 billion; Price-to-sales ratio: 1.9; WSSF Rating: Average) makes software that protects computers from viruses and intruders. The company is best known for its top-selling Norton Anti-Virus program. Products aimed at individual computer users supply 30% of Symantec’s revenue, and half of its earnings. Symantec mainly sells its products in retail stores and through online downloads. It also encourages users to renew their licences every year. Selling anti-virus products on a subscription basis gives Symantec predictable revenue streams and cuts its risk. Symantec continues to increase its focus on selling security software and other services to corporate customers, mostly through companies it has acquired. Symantec’s biggest acquisition to date was its $13.5-billion, all-stock purchase of data-storage specialist Veritas in July 2005....

The market downturn has been particularly hard on cyclical technology companies like Symantec and Autodesk. However, both are world leaders in their niches, which gives them an advantage over competitors; many users prefer to avoid having to learn new software. As well, both companies continue to heavily invest in research. This hurts their earnings, but the resulting new products will help them thrive once the economy starts growing again. Symantec trades at a slightly lower p/e ratio than Autodesk, mainly because of its heavier debt burden. However, both are well positioned for earnings growth when the economy improves. SYMANTEC CORP. $14 (Nasdaq symbol SYMC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 821 million; Market cap: $11.5 billion; Price-to-sales ratio: 1.9; WSSF Rating: Average) makes software that protects computers from viruses and intruders....

SYMANTEC CORP., $15.33, symbol SYMC on Nasdaq, rose over 13% this week after it reported earnings that exceeded analysts’ consensus estimates. In the three months ended January 2, 2009, Symantec’s earnings, excluding one-time items, rose 20%, to $350.2 million from $291.7 million a year earlier. Earnings per share rose 27.3%, to $0.42 from $0.33 on 3.8% fewer shares outstanding. The latest earnings beat consensus forecasts of $0.34 a share. Sales fell slightly, to $1.51 billion from $1.52 billion. In the latest quarter, the computer security software maker saw sales of its consumer products and its data-storage and server-management services each rise 1.2%, partly offsetting a 3.8% decline in security and compliance software. International sales fell 5.8%, partly due to the strong U.S. dollar. However, despite a weak economy, U.S. sales rose 6.5%. Earnings rose despite the fall in overall sales, largely due to cost-cutting measures. Symantec is still a buy....

SYMANTEC CORP. $13.39 (Nasdaq symbol SYMC; SI Rating: Average) (1-408-517-8000; www.symantec.com; Shares outstanding: 836.0 million; Market cap: $11.2 billion) has launched a gaming edition of its Norton AntiVirus 2009. Gaming includes activities such as online poker and other card games, as well as a wide variety of online video games. The Norton gaming edition lets gamers suspend updates, alerts and other background activities which could interrupt games or slow down their computers during gameplay. The Norton software also guards against malware and viruses. The Norton AntiVirus 2009 gaming edition retails for $39.99 U.S. Symantec is still a buy.

MICROSOFT CORP. $20 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.9 billion; Market cap: $178.0 billion; WSSF Rating: Above average) is the world’s largest software company. Its Windows operating system runs roughly 90% of the world’s computers. Microsoft’s Office suite of programs also dominates the business software field. Windows and Office currently supply about 60% of Microsoft’s total revenue. Microsoft is much less risky than other software makers we recommend, such as Symantec and Autodesk, mainly because of the steady cash flows from its Windows and Office programs. However, growing competition from online programs and data storage services could threaten Microsoft’s dominance. That’s why we continue to include Microsoft in our Aggressive Portfolio, instead of the Conservative Portfolio. The company is steadily reducing its reliance on Windows and Office. For example, its Xbox video game machine and other entertainment products now supply about 15% of Microsoft’s total revenue....