Watching Symantec Corp.

Posted on December 1, 2005 , filed under Stocks | Print This Post

SYMC, Symantec Corp., maker of the popular Norton Antivirus, Norton Internet Security, and Norton SystemWorks is trading under $18 at the moment. Short term, I see a possible recovery to $21 by the end of the year. Long term SYMC’s prospects are questionable. I believe many of Symantec’s customers are waiting for the next desktop and corporate release of Windows, dubbed Vista by Microsoft, before upgrading to newer versions of Symantec products. Microsoft is planning to release Vista in 2006. Due to the stringent hardware requirements of Vista, end users will have to upgrade to enjoy the benefits of the new OS. Each new release of Windows has brought a surge in computer hardware sales. Vista’s release will open new OEM opportunities for utilities software makers such as SYMC. A few companies with unspent year end IT budgets may upgrade in the interim since Vista will likely go through a few service releases before being adopted into corporate use. I see one potential downside risk for companies like SYMC. Microsoft is releasing a subscription based service called OneCare Live that will incorporate antivirus, antispyware, and firewall software. You can read about the service from this NewsFactor article on Yahoo. If Microsoft were to decide to incorporate the service into Vista as a core component with no cost I would see that as a major threat to SYMC. Microsoft would do to SYMC, MFE, McAfee, Inc., and similar companies, what it did to Netscape during the browser war or Eudora during the e-mail war. I would pay close attention to Microsoft integrating OneCare Live as a free service into windows. There is no indication yet, but it is a distinct possibility. If that happens I would short shares of both SYMC and MFE. I believe both would drop on speculation that users would rather adopt a free Microsoft solution than a paid one from a third party software company.

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