Symantec bags $500m investment but sees profits tumble

Silver Lake pouring $500m into cybersecurity giant but profits and sales both down for Q3

Symantec has bagged a $500m (£344m) investment from private equity house Silver Lake, but saw profits fall in its first quarter since separating from Veritas.

Symantec is using the Silver Lake investment, along with the cash from the Veritas sale, to return $5.5bn to its shareholders by March 2017. This seemed to be welcomed by the market, with Symantec's share price going from $19.18 per share to $21 in after-hours trading.

But despite this rise in share price, Symantec reported a disappointing set of results for its Q3 2016.

For the three months to 1 January, Symantec's GAAP net profit was at $170m, down 23 per cent year on year, on GAAP sales of $909m, down six per cent over the same period.

Thomas Seifert, Symantec's chief financial officer, said on the earnings call the fall in sales was the result of the rise of the US dollar against other currencies which created a headwind of about $40m compared with the same quarter last year.

Michael Brown, Symantec CEO, said the results were positive for a company undergoing a transition.

"We are entering the second half of our transformation with a stronger foundation, evidenced by new products that are gaining mind share among customers, better top-line performance, and a clear path to long-term profitability," he said. "I'm pleased with the progress we have made against our priorities, including strengthening our security portfolio, enhancing our go-to-market capabilities, improving our cost structure and efficiently allocating capital."

Earlier this week Brown said the Veritas sale puts the company in a good position to look at acquisitions, and this was reiterated on the earnings call although he stressed they must be the right targets.

"We're going to continue to be very judicious as we think about what are the right assets that need to be tightly aligned with the strategy and they need to make financial sense over a similar timeframe, meaning a timeframe of a couple of years for us," he said. "It can't be something that's going to pay off 10 years from now."

He also added that having Silver Lake, which also owns a stake in Dell, on board helps the company identify the right targets to pursue.