May 11, 2018 / 9:57 AM / 14 days ago

RPT-BUZZ-Street View: Symantec's radio silence on probe "shocking"

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** Symantec gives a weak FY forecast and says it is investigating concerns raised by a former employee, giving no details other than the probe was not related to a security concern or a breach in its products or systems

** The cyber security company’s stock tumbled 20 pct after-hours Thurs, slides ~26 pct premarket on Friday

** SYMC also abandons Q&A on earnings call with analysts and cancels call backs from analysts/investors, which Cowen and Co calls “shocking”

MORE SHOES TO DROP?

** Baird (“neutral”; $25) stays cautious on SYMC shares and says it assumes the probe is accounting related since the audit committee is involved

** Deutsche Bank (“hold”; $22) says the only “confusing” accounting/financial issue is how Enterprise DR/billings growth can be so strong (+33% in Q4) even considering the mix shift to ratable and the invoicing duration increase

** Morgan Stanley (“equal-weight”; $26) says after two qtrs of high-single digit current billings growth, flat rev growth in ‘19 is perplexing, but could be explained by shift to recurring rev

** MS says the forecast is the more benign of the two issues and the “riddle” on the cause for the probe will likely remain an open question for some time, keeping it on the sidelines

** DB sees potential for two more issues: 1) probe could result in a financial restatement or, even worse, a leadership fall-out and/or customer hesitation, and 2) back-end loaded FY guidance leaves space for a potential guide-down

** Jefferies (“underperform”; $20) in note titled “Does It Get Any Worse?” says the lack of mgmt Q&A did little to clear the air and also questions sustainability of consumer rev growth (to 7% in Q4 from 4% in Q1) after expiry of Equifax-driven boost

** Cowen (“underperform”; $20) notes guidance could be hit by outcome of probe, and says “While this may all amount to nothing, this is undoubtedly a serious matter, and it could be awhile before transparency and investor confidence improves” (Reporting by Savio D’Souza)

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