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Tech stocks - Thursday, July 10, 2008

Tech:stocker - Symantec: Securing Our Computers and Our Portfolio

Looking for a "stable staple" in the tech sector we at tech:stocker decided to discuss Symantec (SYMC:NASDAQ). While best known for their Norton AntiVirus Software, has steadily become a leader in infrastructure software.

In the interest of full disclosure, we at tech:stocker can't remember the last time we bought an anti-virus software other than Norton's AntiVirus. Still, that's no reason to purchase a company. The fact that Symantec has moved well beyond simply selling security software is a reason to invest. Symantec's corporate products not only compliment its existing security software but open new sales channels that include storage management, consumer security, data backup, and endpoint security while serving the increasingly complex security needs of corporations.

Symantec isn't without its fair share of competitors. Mcafee (MFE:NYSE) is probably the first company that comes to mind but their more narrow focus on consumer products combined with an operating income that is not in line with their market valuation makes them a riskier investment. While the latter is a minor point, the former makes them a little too dependable on one segment and in a down economy, we firmly believe in diversity.

We believe the real threats to Symantec's long-term growth will be on the corporate side from the likes of Trend Micro (TMICY:OTC) and tech:stocker favorites IBM (IBM:NYSE) and Cisco (CSCO:NASDAQ). Cisco's IronPort software has a strong PR push and is being positioned as a complete enterprise spam, virus and spyware protection. While there is plenty of room for several strong players, this may be leading to some competitive battles for customers a few years down the road.

Aside from its product line, Symantec's true strength is its CEO, John Thompson. Over the last five years has grown from $1.8b to a predicted $5.8b for 2008 while keeping operating expenses in line with the growth. Mr. Thompson seems extremely committed to improving operating efficiency in order to boost the company's eps 2-3% annually. Having been honored been appointed by President George T. Bush to the National Infrastructure Advisory Committee, Mr. Thompson still finds the time to server on the boards of UPS and Seagate Technology while also serving on the board of Teach for America. Mr. Thompson truly is a rockstar CEO without the attitude.

Over the next 12 months we predict Symantec will rise to $23 per share as it will beat analysts expectations. In today's uncertain market, Symantec is as close to a sure bet as we can find. Most investors won't get rich buying the stock, but modest gains are better than no gains.