What happened
Shares of Symantec Corporation (SYMC 2.75%) were tumbling today after the cybersecurity specialist announced an internal investigation that may lead to financial restatements and a delay in filings. As a result, the stock was down 34.7% as of 11:10 a.m. EDT.
Image source: Getty Images.
So what
The company was vague about the investigation, but it said it had notified the SEC and hired independent counsel to assist in the investigation after a former employ tipped the company off to the issue. Symantec plans to update the SEC as the investigation proceeds.
Management also said that the investigation was in the early stages, and ir cannot predict its duration or outcome. Finally, it said that guidance and results may be affected, and it would not be able to file its 10-K annual report by the normal deadline.
Separately, the company reported fourth-quarter results. Revenue in the period increased 10% to $1.22 billion, ahead of estimates at $1.19 billion, and adjusted earnings per share improved from $0.28 to $0.46, beating expectations at $0.39. However, guidance was weaker than expected as the company sees EPS for the current year falling from $1.69 to between $1.50 and $1.65, worse than the consensus at $1.81.
Still, in light of the investigation news, the market seemed to ignore the earnings report.
Now what
It's unclear at this point what effect the investigation could have on the stock, but restating financial statements could be devastating. Investigations such as this can lead to the ouster of top executives like the CEO and CFO if the accounting issues are egregious enough. Diamond Foods stock, for instance, fell more than 75% on its own accounting scandal in 2011-2012.
It's too early to say which way Symantec shares will go, but look out for an update in the coming weeks.
