The resignation of Symantec vice-chairman and president Gary Bloom is apparently one reason why the shares of the security-software developer are down some 5% today. At below $18, Symantec (symbol SYMC) is not far from its 52-week low.
Bloom was top man at Veritas when it was acquired by Symantec in 2005. Today's share-price decline implies that his talents are worth close to $1 billion (the loss in market value since news of his departure broke). However, since Bloom wasn't in charge -- John Thompson is chairman and CEO -- and won't be replaced, it's hard to see why his exit should be this harmful to the stock or to the outlook for Symantec. Several analysts note that Symantec, which makes Norton antivirus software and sells a host of other computer-security products and services, is also searching for a chief financial officer. That would seem to be a bigger need.
This isn't the first time that Symantec shareholders have experienced motion sickness. In the summer and fall of 2005, the stock rallied from $18 to $24 before a profit warning in November sent it plunging below $20. But some analysts say that investors have overreacted and that Symantec's shares will likely recover. Prudential's Michael Turtis cites Symantec's strong security and data-storage-management businesses in saying to "overweight" the stock (that's a positive rating). Sarah Friar of Goldman Sachs says that Symantec operates in a good industry and that its arch-competitor, McAfee, has bigger problems. Indeed, McAfee's shares (symbol MFE) are off a whopping 15% today after the company issued a profit warning. That's likely another reason for the drop in Symantec. Friar, incidentally, rates Symantec's shares "outperform."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Symantec is a profitable company with low debt and fair growth prospects. At close to $18, the stock sells at 18 times the $1 per share that analysts, on average, expect the company to earn in the four quarters ending March 2006, and 15 times estimates of $1.15 per share for the year ending March 2007.
Because Symantec has some of the best products in a vital and fast-growing part of the tech sector, the stock is capable of another vigorous rally. Just be prepared for more volatility between now and January 31, when Symantec is next scheduled to report quarterly earnings.
--Jeffrey R. Kosnett
-
USPS Is Raising Prices for Holiday Shipping: Dates and Increases You Need to KnowWhat the USPS's $16 price hike means for your wallet and your small business.
-
July CPI Report Ignites a Risk-On Rally: Stock Market TodayMarket participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
How to Invest for a Fall Interest Rate Cut by the FedA lot can happen between now and then, but the probability the Fed cuts interest rates in September is back above 80%.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
If You'd Put $1,000 Into Berkshire Hathaway Stock 20 Years Ago, Here's What You'd Have TodayBerkshire Hathaway is a long-time market beater, but the easy money in BRK.B has already been made.
-
If You'd Put $1,000 Into Procter & Gamble Stock 20 Years Ago, Here's What You'd Have TodayProcter & Gamble stock is a dependable dividend grower, but a disappointing long-term holding.
-
My Three-Day Rule for Investing: And If it Applies NowStock Market I've seen a lot in my career. Here's what I see now in the stock market.
-
Is It Time to Invest in Europe?Stock Market Europe is being shaken out of its lethargy, militarily and otherwise, by Donald Trump's changes in U.S. policy. Should investors start buying?
