What Caused Symantec’s Stock to Surge ~9% after Fiscal 3Q16 Results?

What Helped Symantec Rise ~9% after Fiscal 3Q16 Results?

(Continued from Prior Part)

Silver Lake’s $500 million investment boosted Symantec’s stock

Previously in the series, we discussed Symantec’s (SYMC) recently announced fiscal 3Q16 results. Though its revenues failed to grow, fiscal 3Q16 results did beat analysts’ expectations. In a separate press release, Symantec stated that Silver Lake Partners, a private equity (or PE) firm, will invest $500 million in the company. Silver Lake purchased 2.5% in convertible senior notes with a conversion price of $21 per share that are due for maturity in 2021. Ken Hao, who is a managing partner of Silver Lake, will join Symantec’s board.

Commenting on Silver Lake’s investment in Symantec, Daniel Ives, an analyst at FBR Capital Markets, stated, “They’re going through a major transition as a company and Silver Lake getting involved at this point could only probably help them.” Ives also shared his opinion that Silver Lake owing to its investments and expertise enjoys credibility in the tech space, which will be helpful to Symantec in the current scenario.

Symantec stock has fallen ~25% in the last year

Silver Lake’s investment in Symantec’s stock is helping to restore investors’ confidence in the company. Symantec’s stock surged by ~9.5% to $21 on February 4, 2016. It further got a boost when news surfaced that Elliott Management had taken a stake in Symantec.

Rising competition in the cybersecurity space, the flailing PC market, and continuing consolidation has made it difficult for the company to report revenue growth. As a result, Symantec’s shares have fallen approximately 25% in the last year. Microsoft’s (MSFT) Windows 10 launch and Intel’s (INTC) Skylake CPU platform were expected to revive demand in the declining PC market. However, recent PC shipment figures haven’t been affected yet.

Though Symantec leads the DLP (data loss prevention) and endpoint protection space, relatively new companies like FireEye (FEYE) and Palo Alto Networks (PANW) are growing fast. PANW recently entered the endpoint protection space.

Investors who wish to gain exposure to Symantec can consider investing in the Technology Select Sector SPDR Fund (XLK). XLK invests 35% of its holdings in application software. It invests ~0.34% of its holdings in Symantec.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Symantec Beat 3Q16 Estimates despite the Strong Dollar

• Part 2 - How Did Symantec’s Operating Segments Perform?

• Part 3 - How Sluggishness in the PC Market Impacted Symantec’s Growth