Business and Commerce News

According to figures from the New Zealand Television Broadcasters’ Council, TV advertising revenue totalled $NZ591.7m for the 12 months to 31 December 2003 up from $NZ516m in 2002.

Revenue for the quarter ending 31 December 2003 was $NZ176m compared to $NZ151.1m in the same quarter in 2002, an increase of $24.9m or 16.5%.

The NZTBC—representing the TV broadcast industry, said that the annual increase was the product of strong economic growth and stable audiences for television in competition with other media. The revenue figures are for free to air and pay television.

The NZTBC’s executive director Bruce Wallace said that viewing levels for television were stable compared to 2002 with a small rise in the last six months of the year particularly amongst household shoppers with children and in Auckland.

The sectors that contributed the strong rises in the December quarter included home improvements, banking and investment, leisure/entertainment, cosmetics, retail and telecommunications, according to Nielsen Media Research.

All companies in the NZTBC—CanWest New Zealand, Prime Television New Zealand, SKY Network Television and Television New Zealand—reported continuing strong demand in 2004.

GAAP Results: Net income for the fiscal fourth quarter was $117 million, compared to $68 million for the same quarter last year. Earnings per share was $0.33, compared to earnings per share of $0.21 for the same quarter last year. For fiscal year 2004, Symantec reported net income of $371 million, compared to net income of $248 million for fiscal year 2003. Earnings per share was $1.07, compared to earnings per share of $0.77 for fiscal year 2003.

Non-GAAP Results:Non-GAAP net income for fiscal fourth quarter was $126 million, compared to $78 million for the same quarter last year. Non-GAAP earnings per share was $0.35, compared to earnings per share of $0.23 for the year-ago quarter. For fiscal year 2004, Symantec reported non-GAAP net income of $411 million, compared to $280 million in fiscal year 2003. Non-GAAP earnings per share was $1.18, compared to earnings per share of $0.86 for fiscal year 2003. Non-GAAP results and related reconciliation, as outlined in the attached consolidated statements, exclude expenses from the amortization of other intangibles from acquisitions, acquired in-process research and development, restructuring charges, and patent settlement charges as well as related income tax benefits. See “Use of Non-GAAP Financial Information” below.

“We continue to execute on our vision of helping customers secure and manage their IT infrastructure, with last quarter’s performance capping off a tremendously successful year,” said John W. Thompson, Symantec chairman and CEO. “We are encouraged by the building momentum in the enterprise segment and, once again, the consumer segment turned in a stellar performance.”

Revenue Components

For the quarter, Symantec’s worldwide enterprise business, including enterprise security, enterprise administration, and services represented 52 percent of total revenue and grew 29 percent year-over-year. Symantec’s enterprise security business represented 38 percent of total revenue and grew 30 percent; the enterprise administration business represented 12 percent of total revenue and grew 26 percent; and the services represented 2 percent of total revenue and grew 32 percent compared to the same quarter last year. Symantec’s consumer business represented 48 percent of total revenue and grew 62 percent year-over-year.

International revenues represented 53 percent of total revenue in the fourth quarter and grew 48 percent over the same quarter last year. Japan led the increase for the quarter with 66 percent growth, followed by Canada with 50 percent growth. The Europe, Middle East and Africa region recorded 48 percent growth, Asia Pacific recorded 36 percent growth and Latin America grew 12 percent. The United States grew 37 percent.

Business Outlook

Symantec is raising forward-looking guidance for the fiscal first quarter ending July 2, 2004, as follows:

Revenue is expected to be in the range of $525 to $555 million, an increase of $40 million from prior guidance.

GAAP earnings per share is expected to be $0.30 at the midpoint of revenue guidance.

Non-GAAP earnings per share is expected to be $0.33 at the midpoint of revenue guidance.

Symantec is raising forward-looking guidance for fiscal year 2005 ending April 1, 2005, as follows:

Revenue is estimated at $2.335 billion, an increase of $160 million from prior guidance and a 25 percent increase over fiscal year 2004.

At the guided annual revenue, the quarterly revenue estimates are as follows: Jun-04 $540 million; Sep-04 $565 million; Dec-04 $615 million; and Mar-05 $615 million.

By business segment we are estimating the following revenue growth and mix for fiscal year 2005:

Consumer Products 28% growth, 48% mix

Enterprise Security 18% growth, 37% mix

Enterprise Administration 34% growth, 13% mix

Services 19% growth, 2% mix

GAAP earnings per share is estimated at $1.37, a 28 percent increase over fiscal year 2004.

Non-GAAP earnings per share is estimated at $1.46, a 24 percent increase over fiscal year 2004.

Earnings per share by quarter is estimated to be as follows:

GAAP Jun-04 $0.30; Sep-04 $0.32; Dec-04 $0.37; Mar-05 $0.38

Non-GAAP Jun-04 $0.33; Sep-04 $0.34; Dec-04 $0.39; Mar-05 $0.40

GAAP gross margin is forecasted to average 82.8 percent for the full year, with non-GAAP forecasted at 84.7 percent.

GAAP operating income is estimated at $719 million or 31 percent of revenue for the full year, with non-GAAP estimated at $771 million or 33 percent of revenue.

Common Stock Equivalents (CSE’s) are expected to grow by approximately 3 percent over the next year.

Non-GAAP forward-looking guidance for fiscal year 2005 excludes the pre-tax amortization of other intangibles from previous acquisitions of approximately $13 million per quarter, or $52 million for the entire fiscal year.

Quarterly Highlights

Symantec signed 264 contracts worldwide worth more than $100,000 each, including 70 worth more than $300,000 and 11 worth more than $1 million each, during the quarter.

Symantec signed new or extended agreements with customers including Knight Ridder, the nation’s second-largest newspaper publisher; The Guardian Life Insurance Company, the fourth largest mutual life insurance company in the United States; Fifth Third, a diversified financial services company; Hughes Supply, one of the nation’s largest diversified wholesale distributors; Flextronics, the leading Electronics Manufacturing Services provider focused on delivering operational services to technology companies; FrontBridge Technologies, the enterprise market leader for email security and message management services; MerckKGaA, an international leader in its core field of pharmaceuticals and chemicals based in Germany; Tata Consultancy Services, one of the world’s largest global software consulting and services organizations; Benic Solutions Corporation, a fully-owned subsidiary of Kawasaki Heavy Industries, Ltd. based in Japan, providing information system and IT management services for Kawasaki.

During the quarter, the company released the Symantec Gateway Security 300 Series appliance. This easy-to-use appliance delivers security and networking capabilities including firewall, intrusion prevention, intrusion detection, antivirus policy enforcement, content filtering and virtual private networking (VPN) functionality to provide small business secure high-speed access, reliable connectivity and ample bandwidth at an affordable price.

In addition, Symantec launched the Symantec Clientless VPN Gateway 4400 series. The new appliance line provides customers easy-to-manage, secure remote access to corporate networks, allowing enterprises to roll out secure remote access to meet business objectives and increase efficiency.

Symantec announced the new Symantec Managed Security Services Secure Internet Interface, which provides clients with greater visibility into their security posture and a deeper perspective on how to mitigate risks in the global threat landscape. It also provides enhanced device tracking and management, and expanded administration capabilities to help client organizations better enforce their security model through the Secure Internet Interface.

Symantec also introduced Enterprise Security Manager (ESM) for the Federal Information Security Management Act of 2002 (FISMA). Based on system security requirements of FISMA, Symantec ESM for FISMA provides specific, pre-configured security policies, which allow government agencies to audit their environments for compliance.

Consolidated Financial Statements

About Symantec

Symantec is the world leader in providing solutions to help individuals and enterprises assure the security, availability, and integrity of their information. Headquartered in Cupertino, Calif., Symantec has operations in more than 40 countries.

The Commission acted after considering complaints that lack of competition in the mobile termination market means charges for fixed-to-mobile calls in New Zealand are unreasonably high. Telecommunications Commissioner Douglas Webb said the Commission was satisfied that an investigation into regulating mobile termination is justified.

Mobile termination rates are the fees mobile phone companies charge other carriers to terminate calls on their networks, enabling mobile phone users to receive calls from different phone networks. Mobile termination charges are a significant contributor to the retail prices of fixed-to-mobile and mobile-to-mobile calls.

This is the first time that the Commission has looked specifically at the mobile sector under the Telecommunications Act.

“There has been significant expansion and technological change in the mobile telephony industry in recent years, and this is likely to continue,” said Mr Webb.

“However, the Commission considers that there are features of the mobile termination market that give rise to concerns about the exercise of market power by mobile carriers.

“In particular, where the calling party (on a fixed or mobile network) and the called party (on a mobile network) are on different networks, the originating network operator has no option but to seek terminating access on the mobile network of the recipient, in order for the call to be completed. In these circumstances, mobile carriers may be able to charge prices for wholesale mobile termination above competitive levels, leading to high retail prices for callers to mobile phones.”

The Commission is initiating the investigation under Schedule 3 of the Telecommunications Act. Under Schedule 3, the Commission can undertake an investigation into whether or not a new telecommunications service should be regulated. The Commission will then make a recommendation to the Minister of Communications.

The Commission emphasised that its decision to commence an investigation does not mean that a regulatory outcome is inevitable. The Commission expects to receive submissions from the industry and from user groups. It will hold hearings, and will listen carefully to all views before making a decision.

The Commission will issue a Gazette notice shortly to formally signal the commencement of the investigation under Schedule 3 of the Telecommunications Act 2001.

Background

Telecommunications Act 2001: Part 1 of Schedule 3

Procedure for designated services or specified services (except specified services that are to become designated services)

1. Commission’s investigation

(1) The Commission may, on its own initiative or if requested to do so in writing by the Minister, commence an investigation into whether or not Schedule 1 should be altered in any of the ways set out in sections 65 to 67 (the proposed alteration) if:

(a) the Commission is satisfied that there are reasonable grounds for an investigation into the matter; and

(b) in respect of an alteration of a kind set out in section 65, it is not less than 1 year before the expiry of the service.

(2) If an investigation has been requested by the Minister and the requirements set out in subclause (1)(a) and (b) have been met, the Commission must commence the investigation not later than 10 working days after receiving the Minister’s written request.

(3) The Commission must give public notice of the commencement of the investigation.

Commenting on the decision, Reserve Bank Governor Alan Bollard said “The New Zealand economy continues to perform strongly and this is being supported by further improvements in the global economy. However, domestic inflation pressures remain strong and annual CPI inflation looks set to rise over the year ahead, as we projected in our March Monetary Policy Statement. Moving interest rates to less stimulatory levels appears prudent to ensure inflation remains within the target range over the medium term.

“Looking forward, the Reserve Bank will continue to monitor the data to see what it implies for medium-term inflation. At this stage, it remains unclear whether the fall in the exchange rate over recent weeks will be sustained and thus what its impact on activity and inflation pressures will be. Within parts of the domestic sector, such as housing and construction, some data suggest a cooling in activity, but the evidence is mixed and pricing pressures remain strong. Given these uncertainties, a further adjustment to monetary policy cannot yet be ruled out.

“However, as noted in March, a number of factors are likely to have a dampening effect on inflation pressures over the next year or so, reducing the need for policy action. Two such factors would include a further fall in net immigration and the delayed effects of the recent high exchange rate on activity in the export sector.

“The Reserve Bank’s next Official Cash Rate announcement will come with the release of a Monetary Policy Statement on 10 June 2004.”