1. Symantec (SYMC$16.90) – Buy May 18, 2016
Market cap $11.0 Bil
Dividendyield1.75% (wasjustcut 50%)
Analystratings: Buys4, Holds 23, Sells 3 (sentimentverynegative)
Short interest: 4%
Leadingsecuritysoftware company. Ownerof NortonSecurityconsumerbrand,aswell asenterprise
securityproducts. Consumer46%of revenues;Enterprise 54% of revenues.
EPS: P/E
FY Mar’16(A) $1.03 16.4x
FY Mar’17 $1.06-1.10 (companyguidance) 15.6x
FY Mar’18 $1.30-1.35 12.7x
FCF:
FY’16(A) $566mil (5% FCF yield)
FY’17 $500mil (4.5% FCF yield),pre-$900mil cashtax paymentandexpectedrestructuring chargesof
~$150mil
FY’18 $550-600mil range (5% FCF yield),pre-expectedrestructuringchargesof ~$100mil
BUY – Target $21.00-24.00 (16-18x FY’18 eps),(+24-40%)
Positives:
1. NewCEO coming
2. Enterprise segmentof business (~54% of revs) gainingtraction
3. Ongoingandnearlydailycyberbreaches(SWIFTbeingthe latest)
4. $400mil costsavingsprogram overnexttwo years(~47c pershare)
5. Large capital returnto shareholders: $3.6Bil individendsand share repurchasesalreadycompleted;
$1.3Bil (12% of market cap) still to do by March 2017
6. After thiscapital deployment,SYMCwill be left with~$2Bil net cash (~18% of mkt cap)
Risks:
1. Currentrevenues show weakeningtrend
2. Highpenetrationof consumer securitysoftware anddecliningPCsales
3. Securityisa competitive market,manypublicplayers
Doug Sokolower
917-494-2030
dsokolower@yahoo.com

2. June 13, 2016 – follow-up note:
Last night, SYMC ($18) announced the acquisition of cybersecurity firm Blue Coat for $4.65Bil
cash.
Positives:
-buying leading cybersecurity firm that expands SYMC's presence in the enterprise (pro-forma 62%
of revs from enterprise); powerhouse combination
-brings over new experienced, cyber CEO, Greg Clark, CEO of Blue Coat
-another $150mil in cost synergies from acquisition
-highly accretive, ~25% to FY'18 eps, now guided to $1.70-1.80 (with street at $1.39), (SYMC
internal expectation $1.37)
-does not include any potential revenue synergies = upside
-cheap valuation: at $18, SYMC trades for 10x FY'18 eps!
Risks:
-merger integration risk
-higher debt load: pro-forma $1.7Bil net debt (0.9x net debt/EBITDA) vs. $2.8Bil net cash (-1.9x)
yesterday. March 2017 (after the $1.3Bil share repo) net debt of ~$3.5Bil, vs. ~$1.0Bil net
cash yesterday
Bottom line: Buy SYMC. New target: 15+x FY'18 eps, or $26+ (+44%+).
Attached is my initial note on SYMC from May 18, 2016 (SYMC $16.90).
Doug Sokolower
cell: 917-494-2030
dsokolower@yahoo.com