Antivirus Software Might Be Dead, But Symantec Certainly Is Not

Symantec's traditional antivirus software seems to have stagnated, in terms of growth. The company is, however, quickly introducing new, non-traditional revenue sources to its portfolio such as advanced cyber-security software and mobile-device security solutions, which should drive new growth in the company.

May 28, 2014 at 9:45AM

Symantec (NASDAQ:SYMC) is a consumer antivirus software manufacturer that is, perhaps, best known for its flagship Norton Antivirus. Sales of the company's Norton brand have stagnated in the last couple of years, a trend that prompted one of its executives to publicly declare that antivirus software is dead. But, make no mistake, the cyber-security industry is still valued at $70 billion per year.

Changing tactics
One of the chief early uses of antivirus software was to prevent hackers from intruding into IT systems. But, hackers nowadays have become so tech savvy that many manage to sneak through, whether or not antivirus software is already pre-installed. Brian Dye, Symantec's senior vice president of information security, estimates that antivirus software now only manages to catch 45% of hackers. The company also says that 2013 was the worst year in the history of cyber crime, with associated losses hitting $110 billion.

This has forced leading IT and network systems protection companies to rethink their strategies. For instance, network equipment manufacturer Juniper Networks (NYSE:JNPR) is encouraging customers to place fake data inside firewalls to distract potential hackers. FireEye (NASDAQ:FEYE) has invented a technology that scans networks for malicious-looking code that could have made it past a system's first line of defense. In January, the company acquired Mandiant for $1 billion, a small company run by a former Air Force team that acts as forensic investigators after a cyber-crime bust-up.

Symantec has been a bit late to the antivirus revolution party, but has recently joined the fray by creating its own team to respond to hacked businesses. The security software developer plans to sell intelligence briefings to clients so they can learn where and why they are getting hacked. Symantec is also developing a novel technology to look for advanced malicious software that resides inside networks and often goes undetected.

Symantec certainly needs a turnaround. Its revenue fell in the last two quarters, although its bottom line improved mainly as a result of cost-cutting. The company reported its fourth-quarter and full-year fiscal 2013 results on May 8, 2013, which showed that revenue during the quarter had dropped 7% to $6.67 billion, license sales fell 14%, and subscription sales dropped 6%. Full-year revenue fell 3.3% to $6.7 billion, mainly as a result of the 19% reduction in license sales. Licenses and subscriptions account for 11% and 89% of Symantec's revenue, respectively. Full-year net income improved 19% to $898 million, or $1.28 earnings per share.

Mobile security and BYOD to revive consumer security software division
Symantec's consumer security software division accounts for roughly 42% of its enterprise value. Its revenue in fiscal 2013 clocked in at $2.11 billion, or 31.5% of the company's overall revenue. The segment has largely stagnated, and its revenue in fiscal 2011 and 2012 came in at $1.95 billion and $2.10 billion, respectively.

The biggest reason for the stagnation is Symantec's limited footprint in high-growth sectors such as mobile security solutions and BYOD, or bring your own device. The rapid proliferation of smartphones has been accompanied by a huge jump in mobile payments. This has not been lost on cyber criminals, and mobile-related cyber attacks have risen dramatically in recent times. This has been exacerbated by poor security on mobile devices, with cyber criminals targeting sensitive credit card information using sophisticated techniques. Moreover, the cost per cyber crime shot up 50% in 2013.

A recent Forester survey reported that data breach security, mobile application security, mobile device security, and mobile data security are the four biggest areas that require immediate attention, as far as BYOD is concerned. Symantec has been moving quickly to ramp up its mobile and enterprise security solutions, and has introduced corporate mobile security offerings such as Mobile Security, Norton Zone, and App Center. The company has also introduced consumer mobile security offerings, such as Norton Mobile Security, which secure mobile devices against malware. With the rapid growth of mobile device adoption, this new, non-traditional segment should add a lot of value to the company's consumer security software business.

Fire Eye is a growth machine
FireEye is widely considered the leader in advanced cyber security solutions. The company's top line has been growing very rapidly, and improved 81% in the fourth quarter of fiscal 2014 to $57.3 million, and 94% year over year to $161.6 million. The company has, however, been facing the bugaboo of many rapidly growing companies -- failing to turn a profit. Its full-year net loss clocked in at $120.6 million, or $2.66 per basic diluted share.

FireEye's success in advanced cyber security solutions is concrete proof that there is a rapidly growing market here. Symantec might be late to this new line of business, but its strong brand recognition is likely to be a powerful driver once its advanced cyber security solutions start gaining traction.

Foolish bottom line
Although Symantec's traditional cyber security solutions appear to have stagnated, the company has been quickly moving in this direction, as well as creating new mobile security solutions. The security software developer should be able to leverage its strong brand to quickly gain traction in these new markets.

Are you ready to profit from this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Joseph Gacinga has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers