Business World

Wednesday 24 October 2018

Symantec battered after launching investigation into mystery problem

Symantec chief executive Greg Clark.
Symantec chief executive Greg Clark.

Jordan Robertson

Anti-virus company Symantec had its worst day in 17 years last Friday, when the company disclosed that it's conducting an internal investigation that will delay the filing of its annual report and could potentially lead to a restatement of earnings.

The company, headed up by CEO Greg Clark, cut its post-earnings conference call short and later cancelled its scheduled call-backs, in a move that left analysts fearing the worst. "We believe this raises a red flag as it relates to the potential severity of this issue," said Anne Meisner, an analyst at Susquehanna International Group, in a note to clients. She has a neutral rating on the stock and lowered its price target to $24 (€21).

The shares lost 35pc on Friday at one point, the most in almost 17 years, taking about $6bn in market value with them. At least 10 analysts lowered their price targets or ratings on the stock.

Symantec said the board's audit committee is looking into "concerns raised by a former employee". The board has retained outside counsel to advise it and alerted the US Securities and Exchange Commission.

The Mountain View, California-based company beat analysts' earnings estimates in the fiscal fourth quarter, though its outlook for the current period was disappointing. In any case, most analysts were far more concerned about the lack of information about the investigation.

"Despite the strong results, we believe this investigation creates too much uncertainty to have confidence in management's fiscal 2019 guidance, as this could affect historical results and future demand trends," said Andrew Nowinski, an analyst at Piper Jaffray. He downgraded the shares to neutral and lowered his price target to $24.

Bloomberg

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