Symantec probes accounting, says likely no impact on past results - Metro US

Symantec probes accounting, says likely no impact on past results

By Laharee Chatterjee and Munsif Vengattil

By Laharee Chatterjee and Munsif Vengattil

(Reuters) – Symantec Corp on Monday said it did not expect an internal accounting probe that it disclosed last week to have a material impact on its past financial statements, helping allay investor concerns.

The Norton anti-virus maker also provided a bullish revenue and margin growth forecast for fiscal 2020, sending its shares up 2.3 percent after market. That left shares about 25 percent down compared with before Symantec announced last week that it might have to restate results.

Symantec said on Monday its audit committee is investigating reporting of certain non-GAAP accounting measures including those related to executive compensation and some forward-looking statements.

The investigation, which commenced following “concerns” raised by a former employee, will also look into stock trading plans and the company’s public disclosures including commentary on historical financial results, the company said.

Chief Executive Officer Gregory Clark said on an investor call that the company has put on hold all discretionary and performance-based compensation for named executive officers until the investigation concludes.

The company said its audit committee had hired an independent counsel and other advisers to assist in the investigation.

Clark, however, declined to answer any questions about the investigation.

Lack of clarity around the probe, announced on Thursday along with the company’s earnings report, triggered a plunge in shares that wiped out $6 billion from the company’s market value on Friday.

They had closed about 10 percent higher in regular trading on Monday after Symantec announced the investor briefing to provide details on the investigation.

Despite Monday’s gains, the company’s market value is still down about $4.6 billion from its Thursday close.

“It seems to demonstrate to investors that management is looking to get the ship back on course, even if that means withholding executive compensation,” said Morningstar analyst William Fitzsimmons.

Symantec also said it would not initiate any share buyback program during the course of the investigation.

Symantec expects operating margin to be in the mid-30s in 2020, reflecting growth in its enterprise and consumer business units. The company had forecast operating margin of 30 to 32 percent for fiscal 2019 in its earnings last week.

Chief Financial Officer Nicholas Noviello said organic revenue will grow in the mid- to high single digits in fiscal 2020.

“The 2020 guidance certainly looked promising, but there still seems to be a level (of) skepticism regarding the expected shift from consumer to enterprise revenue on the call,” analyst Fitzsimmons said.

(Reporting by Munsif Vengattil and Laharee Chatterjee in Bengaluru and Joseph Menn in San Francisco; Editing by Sriraj Kalluvila and Cynthia Osterman)

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