Interim Symantec CEO: ‘How Our Channel Is Working Has To Be Improved’

Interim CEO Richard Hill is counting on the channel to expand how quickly Symantec gets products out to address a wider cross-section of business opportunities.

Symantec's new interim CEO, Richard Hill, said the company needs to expand how quickly it gets products out to address a wider cross-section of business opportunities.

"How our channel is working has to be improved," Hill told Wall Street analysts during the company's earnings call Thursday. "We've got to accelerate what we get across the entire channel."

The former Novellus Systems chairman and CEO was appointed on an interim basis to serve as Symantec's president and CEO. Hill replaced Greg Clark, who resigned Thursday as president, CEO and board member following nearly three years in the top job.

[Related: Symantec CEO Greg Clark Resigns, Ex-Novellus CEO Tapped As Interim Leader]

Hill said Symantec needs more from channel partners targeting small business, medium business, as well as high-end enterprise business, and said Symantec has effective plans in place today to get the company there. Hill told investors that Symantec wants to lower costs by shifting more expenses to a variable structure in the channel, though he didn't elaborate on what that meant.

The loss of lots of small and mid-sized business was specifically called out by Hill as part of the reason Symantec has a sales hole to fill in its Enterprise security segment. As a company moves up the chain to “hunt elephants,” Hill said that can result in a thinning out of the herd.

As a result, Hill said companies can end up with large lumps in their business, leading to highly variable potential outcomes depending on how many of those elephants are successfully hunted. Hill said Symantec needs to "rebuild its base core" so that coming up short on a few large opportunities doesn’t result in missed projections or lowered forecasts.

"We know exactly how to fix it," Hill said. "I think our products are ready, and I do think we're going to change this trajectory."

Sales for the quarter ended March 29 sunk to $1.19 billion, down 1.7 percent from $1.21 billion last year. On a non-GAAP basis, sales for the quarter ended March 29 sunk to $1.2 billion, down 2.2 percent from $1.22 billion a year earlier. That fell short of Seeking Alpha's expectation of $1.21 billion.

The company reported net income of $34 million, or $0.05 per diluted share, improved from a net loss of $59 million, of $0.10 per share, the year before. On a non-GAAP basis, net income dropped to $256 million, or $0.39 per share, down 14.1 percent from $298 million, or $0.44 per share, the year before. That was in line with Seeking Alpha's expectations.

For all of fiscal 2019, Symantec's revenue sunk to $4.73 billion, down 2.1 percent from $4.83 billion the year prior. Net income, meanwhile, plummeted to $31 million, or $0.05 per share, down 97.3 percent from $1.14 billion, or $1.70 per share, the year prior.

Symantec's stock fell $2.92, or 13.17 percent, to $22.17 in after-hours trading Thursday. That's the lowest the company's stock has traded since January.

Enterprise security sales dropped to $584 million, down 2.2 percent from $597 billion the year prior. Consumer digital safety revenue, meanwhile, declined to $605 million, down 1.3 percent from $613 million last year.

For the coming quarter, Symantec expects non-GAAP earnings of $0.30 to $0.34 per diluted share on adjusted sales of $1.175 billion to $1.205 billion. Analysts had been expecting non-GAAP earnings of $0.40 on adjusted sales of $1.2 billion, according to Seeking Alpha.