Symantec Shares Drop on Rival’s Giveaway Plan

From Bloomberg News

Shares of Symantec Corp. and other makers of anti-virus software fell Tuesday after Computer Associates International Inc. offered free security programs to some home users of personal computers.

Computer Associates, based in Islandia, N.Y., said it would “aggressively promote” free one-year subscriptions for its eTrust EZ Armor package of programs to “qualified” users of PCs running Microsoft Corp.'s Windows operating system. The software sells for about $50.

Computer Associates, the fifth-largest software company, is trying to expand use of its security software to increase demand because spending on such programs is forecast by analysts to rise faster than on other products.

Symantec, the world’s largest maker of anti-virus programs, called Computer Associates’ move a “desperate” attempt to enter a new market.


“This is one way to generate some buzz,” said Damian Rinaldi, an analyst with First Albany Corp. “The company to my knowledge has a very limited presence in the home market. It won’t hurt them, given their small presence.”

Symantec, based in Cupertino, Calif., makes Norton security programs. Its shares lost $4.71, or 7.1%, to close at $61.35 in Nasdaq trading.

Internet Security Systems Inc., based in Atlanta, dropped 50 cents, or 3%, to $16.29, also on Nasdaq.

Network Associates Inc., based in Santa Clara, Calif., makes the popular McAfee programs. Its shares fell 75 cents, or 5.4%, to $13.03 on the New York Stock Exchange.


Shares of Computer Associates dropped 41 cents to $22.15.

Symantec shares had gained 63% this year as investors bet that a spate of viruses would boost sales.

The Blaster and SoBig viruses clogged business and government networks this year, prompting customers to buy more programs to protect their systems.

Symantec last month said second-quarter sales rose 32% and raised profit forecasts for the year.


Consumer software accounts for 45% of Symantec’s revenue and 61% of its profit, said Scott Richter, an analyst at ThinkEquity Partners. The business is targeted by the Computer Associates offer.

“They are giving away a product in Symantec’s strongest and most dominant market,” Richter said.