Symantec’s European team should take heed: Chief Executive Officer John Thompson has cracked the whip.
During an earnings call on Wednesday, Thompson singled out Europe as a soft spot, despite the company’s number-one position worldwide in the antivirus market.
“Our European team has lost their security swagger,” Thompson said. “They’ve not quite figured out to embrace the totality of what we have in our portfolio and take those offerings to the marketplace in the same manner as we have in other parts of the world.
“That’s unfortunate, but something that will be fixed in due time,” he said. “I’m not worried about it long term.”
Europe counts for 31 percent of Symantec’s revenue. Thompson said Symantec made leadership changes in Germany after dissatisfaction with performance. Germany also has faced economic woes, he said.
Even though Europe took punches from Thompson, Symantec’s figures for the region aren’t too bad. But the numbers don’t resemble the explosive 30 percent year-over-year growth rates the company had a few years ago, said Graham Titterington, principal analyst at Ovum in London. Those rates are unsustainable over time, he said.
“I think a lot of this is sort of managing expectations,” Titterington said. “It was hardly a disastrous performance.”
Symantec reported 8 percent revenue growth year over year in Europe, the Middle East and Africa. Overall, Symantec reported income of US$259 million for the quarter, with $1.27 billion in revenue, on the low end of analysts’ expectations.
Titterington said of greater concern is Symantec’s shallow growth in the enterprise market, which the company has increasingly focused on. Enterprise revenue growth came in at 5 percent year over year, compared to the consumer market, at 12 percent.
Merging storage vendor Veritas Software with Symantec’s operations may have brought down enterprise growth, since the storage market has a slower growth rate, Titterington said. Symantec completed its $13.5 billion merger with Veritas in July 2005.
Symantec is still very much digesting the merger and aligning product lines, said Thomas Raschke, senior security analyst for Forrester Research. As a result, some Veritas customers have grumbled about licensing terms Symantec imposed following the merger, he said.
“They would tell you and their customers would tell you there is some work to do,” Raschke said.
Germany has been a challenge for Symantec over the years because of strong competition from regional security vendors, Raschke said. But overall, Symantec’s vision of a merged product line that includes storage and security is on the mark, he said.
On the consumer side, Titterington warned that Microsoft’s security offering, Windows OneCare, could soon have an effect on Symantec.
“It looks as if the impact of Microsoft is still yet to happen,” he said.
-Jeremy Kirk, IDG News Service (London Bureau)
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