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Symantec sees pressure on profit margins this year

Symantec Corp, the world's biggest maker of security software, expects profit margins to come under pressure this year as it spends to boost market share.

Shares of Symantec fell after executives said at the company's analyst day on Thursday that operating margins will be flat this year and that investors should expect to see pressure on the profitability of its consumer business.

“I plan to be here for a long time,” said Chief Executive Enrique Salem, who took the helm this year. “I am looking at this long term, not this quarter or next quarter.”

He said Symantec needs to do a better job in the security business and that he was investing in efforts that would help it gain share over the next three to four years.

Symantec has an uneven record when it comes to meeting Wall Street expectations.

Last month it reported disappointing quarterly results because of weak sales of security software for small businesses. Meanwhile rival McAfee Inc's results beat expectations as it claimed gains in market share.

Salem said over the long-term he intends to meet a previously stated goal of boosting operating margins by an average of 1%age point per year over the long term.

Revenue at Symantec's consumer unit grew just 3% in its most-recent fiscal year to $1.7 billion. That's down from growth of 10% a year earlier.

Symantec is looking to expand its consumer business beyond its line of Norton security products. It announced that Hewlett-Packard Co, the world's biggest PC maker, will help sell Symantec's online backup services.

The company already has a PC distribution agreement with HP, through which it sells Norton Internet Security, a suite of programs to fight hackers and other threats.

Software makers covet such deals because consumers like the convenience of purchasing programs right from their PC desktop. The world's top PC makers have similar relationships with various software companies.

HP and Symantec have declined to say when the security software agreement is due to expire. McAfee, the No. 2 security software maker, has said it hopes to woo the contract away from Symantec.

Symantec consumer division president Janice Chaffin said that she intends to negotiate a new contract when the current pact expires sometime after the end of this year. (Reuters)