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What: Shares of antivirus software specialist Symantec (NASDAQ:SYMC) plunged 15% this morning after its quarterly revenue and full-year outlook disappointed Wall Street.
So what: The stock has rallied nicely in 2013 on optimism over management's reorganization efforts, but a 4% revenue decline in the second quarter, coupled with downbeat guidance for 2013, is forcing Mr. Market to sober up a bit. Symantec blamed the disappointing results largely on the realignment of its sales group, which is now split into renewals and new business teams, suggesting that the turnaround is taking longer than expected.
Now what: Management now expects adjusted earnings per share to fall 1%-1.5% on a revenue decline of 3%-4%, worse than its prior view of 5%-7% growth in adjusted EPS and a revenue increase of 0%-2%. "We've reallocated resources to develop new integrated offerings, split the sales organization into renewals and new business teams, and simplified our management structure," said CEO Steve Bennett. "We remain committed to our FY15-FY17 targets and are confident that we are on the right track." With Symantec stock still up about 25% from its 52-week lows and trading at a clear price-to-sales premium to the S&P 500, however, I'd wait for a much wider margin of safety before buying into that turnaround talk.
Fool contributor Brian Pacampara 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.