Symantec Corporation (NASDAQ: SYMC) shares plummeted by 34 percent or $6 billion in market capital on Friday after it went under investigation on allegations that the company may have issued misleading business information.
The company did not provide details regarding the investigation, but said in its earnings transcript that the Audit Committee of the Board of Directors launched an internal investigation “in connections with concerns raised by a former employee.”
Symantec Vice President of Investor Relations Cynthia Hiponia said in the earnings call that the company will not conduct a question and answer portion due to the ongoing investigation.
“While we’ve seen companies put matters of outstanding, transactions, litigation or investigation off-limits for Q&A, we’ve never seen a company cut off any Q&A on any topic from analysts or investors,” said Morgan Stanley analyst Keith Weiss.
Hiponia added on during the conference call that the investigation "does not relate to any security concern or breach with respect to our products or systems."
“The investigation is in its early stages and the Company cannot predict the duration or outcome of the investigation.” said Symantec in its earnings release, “The Company’s financial results and guidance may be subject to change based on the outcome of the Audit Committee investigation.”
At least 15 Wall Street analysts slashed their price targets on Symantec’s stock by Friday morning after it said its financial results may be affected, according to FactSet.
Oppenheimer & Co. cut its rating for Symantec’s stock to “perform” from “outperform.” Analysts from Baird, Blair, Barclays, and Credit Suisse reiterated their hold ratings, while MoffettNathanson downgraded to a sell.
“The internal probe ... could result in a restatement of financials but worse case, there is also the risk of leadership fall-out and/or customer hesitation if there are credibility concerns,” Deutsche Bank analysts said.
Symantec provided weaker than expected guidance for the first quarter and fiscal 2019, but analysts said the weak forecast did not compare to the matter of the investigation.
For the first quarter, Symantec forecasted revenue between $1.13 billion to $1.16 billion and a diluted EPS of 31 cents to 35 cents. For the full year, the company forecasts revenue between $4.76 billion to $4.90 billion and diluted EPS between $1.50 to $1.65, which can be expected to change pending on the probe.