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Tickers in this Article: SYMC, INTC
Symantec Corp. (SYMC) is scheduled to announce its second quarter fiscal 2013 results on October 24, 2012, and we notice slight variation in the analysts' estimates. First Quarter Recap

Symantec reported earnings per share of 39 cents in the first quarter of 2013, comfortably ahead of the Zacks Consensus Estimate of 33 cents.

Symantec reported revenues of $1.67 billion in the quarter, up 0.9% year over year from $1.65 billion. The company's investment in cloud security and mobility is slowly paying off, and this is helping the company to gain market share globally.

Gross margin in the quarter was 82.97%, down 136 basis points (bps) from 84.33% in the year-ago period. The decline in gross margin was due to higher costs associated with the company's businesses, and the company expects this trend to continue going forward.

Operating margin was 16.1%, down 220 bps from 18.3% in the year-ago quarter. Operating margin declined as a result of higher operating expense, arising from a substantial increase in research & development and general & administrative expenses.

The company expects second quarter GAAP revenue to be in the range of $1.635 billion to $1.665 billion for fiscal 2013, reflecting a year-over-year decline of 1.0%-3.0%.

Agreement of Analysts

Of the 13 analysts providing estimates for the second quarter, one revised estimate upward and another one revised estimate downward in the last 30 days. Similar movements were noticed for 2013, while one analyst revised the estimate upward in the last 30 days for fiscal 2014.

Some analysts are of the opinion that the company should have a more focused approach toward the Consumer segment. They expect it to remain a growth oriented business and cannot foresee divestiture in the near future. Analysts expect this segment to be an area of focus and it is also believed that the company will adopt more aggressive routesto diversify from a PC-centric antivirus business. This in a way will also help to improve the investor sentiment.

Some analysts believe that currency will have a measurable impact on third quarter bookings and might also impact the fourth quarter guidance. Analysts are apprehensive about whether stronger demand can offset downward currency movement, which could delay the company's growth acceleration or margin expansion strategy.

Magnitude of Estimate Revisions

Over the past 30 days, Zacks Consensus Estimate for the second quarter dropped a penny. However, over the last 90 days, the estimate moved down by 3 cents to 33 cents. Again, for the December quarter estimates went down one penny over the last 30 days, while it has reduced by 2 cents to 37 cents over the last 90 days For fiscal 2013, estimates have remained unchanged over the last 30 days, while the same has moved down by 2 cents to $1.46 in the last 90 days.

 Our Take

Symantec delivered modest first quarter results with EPS surpassing the Zacks Consensus Estimate and revenue improving on a yearly basis. The company also witnessed a mixed geographical revenue performance. The company has enough cash in hand and repurchased shares during the quarter.

Uncertainty over PC sales is going to affect its Consumer segment throughout the year. So analysts advise more focused approach in this segment. They expect the Consumer segment to remain a key asset and cannot foresee divestiture in the near future. Moreover, the company is taking aggressive measures to grow its PC-centric antivirus business.

On the other hand, competition is intensifying as smaller companies like Kaspersky are coming up with better products at regular intervals. Stiff competition from McAfee - acquired by Intel Corp. (INTC) - could fuel competition in the Mobile security software space. Also, the prevailing economic turmoil in Europe may have a negative impact on the business of that region. Currency fluctuation may limit margin expansion for the time being.

However, the company remains the leader in the IT security industry and is competitively priced.

The company has a Zacks #3 Rank, implying a short-term Hold rating.

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