Credit Suisse likes a new incentive plan that Symantec (SYMC) is implementing among its sales force. The new compensation scheme will boost sales productivity, CS says. The new plan will:
maintain quotas for both licence and maintenance, but accelerators for licence sales over quota will be increased. We believe a shift to compensation structure more heavily-weighted toward licence revenue will complement the improving momentum in the organisation over the past six months -similar to the positive effects that resulted from comparable actions at CA and McAfee in the past year.
CS is also upbeat about structural and organizational changes SYMC has made, as well as increased influence of CFO Enrique Salem, who they view as a positive influence. CS also believes that there is room for upside in March quarter due to conservative guidance:
We maintain our belief that upside potential exists to the company’s March quarter outlook given that the high-end of Symantec’s March quarter guidance implies a sequential decline in licence revenue of approximately 15%, which we view as overly pessimistic. We believe that in order for Symantec to miss this conservative licence revenue estimate, the company’s Data centre Management division would have to experience an extreme drop-off in sales, which we view as unlikely given our channel checks.
CS ups its target price to $23.50 and maintains Outperform. Insists that SYMC is a “compelling value investment with improving fundamentals.”
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