I've been researching symantec and have a few initial impressions that I wanted to get some feedback on.
For the last 4 quarters Consensus EPS has missed by 20-30% (consensus of .33 eps, actual .44-.52).
I haven't gotten in touch with any yet, but I think it's because they viewed a decrease of net income of 1.2bn (on 6bn revenue).
So, here's my thought process.
1. I notice an increase of expenses for only one year of 1.2bn (2011). So it went like this: 4.2bn 5.3bn 4.8bn expenses. I mean, it seems pretty obvious to me that something happenedd in the middle year; the question is: will it impact the profitability of the company in the long term? (hint: I believe the opposite).
2. Moving down I come across an account I don't see too often: 'Loss on retirement of debt' for 16m. That's certainly not 1.2bn so I just filed it under the 'check out if time' part of my head.
3. On the balance sheet I notice a 1bn decrease in assets and liabilities.
4. Shares outstanding moves from a growth rate of 1.27% to .33% (and is maintained at that level the following year).
So now I move into the notes and here's what I found:
1. 800m yoy increase of share repurchases. 2. 400m decrease in long-term liabilities (specifically, bonds payable).
Now: share repurchases will increase the EPS since there are less shares. It will also bring up the share price for the same reason.
2. Long term liabilities decrease future debt expenses while INCREASING Net Asset Value growth rate (mainain previous asset growth rate while lowering liabilities = greater NAV.)
By removing this 1.2bn from expenses we arrive at a significantly higher EPS that is dramatically closer to the 1.58 ACTUAL eps.
When I finish my analysis I will post the model, summary, and source material for you guys to disect, critique, and hopefully teach me something.
Until then, I'd be interested in opinions on what I posted here.
