Symantec shares plunged to their worst day in 17 years on Friday, shedding about $6 billion in market value after the cybersecurity firm disclosed it was investigating “concerns” raised by a former employee.
The disclosure came as a major shock to Wall Street since, as CNN Money reports, Symantec “had been red hot thanks to strong demand for its Norton and LifeLock products in the wake of the Equifax data breach and other big cybersecurity lapses.”
In a note included in its quarterly earnings release, Symantec said the audit committee of its board had “commenced an internal investigation in connection with concerns raised by a former employee” and it had notified the U.S. Securities and Exchange Commission of the probe.
“The company’s financial results and guidance may be subject to change based on the outcome of the audit committee investigation,” it said, adding that the filing of its annual 10-K report could be delayed.
Symantec did not disclosure the nature of the investigation but Sean X. McKessy, a former SEC official, told Reuters the warning of a delay in filing the 10-K suggests the issue is related to accounting practices.
In trading on Friday, the company’s shares plunged 33.1% to $19.52, the steepest decline since 2001 and the second-worst day since Symantec went public in 1989.
Symantec’s fourth-quarter results beat analysts’ estimates but it guided for fiscal 2019 revenue of $4.76 billion to $4.9 billion and earnings per share of $1.50 to $1.65, below a consensus of $4.93 billion and $1.80.
The guidance raised “fresh questions about the company’s standing in a very competitive IT security market,” TheStreet said, noting that Symantec also forecast that Enterprise Security revenue would be down by 2% on an organic basis in fiscal 2019.
“There don’t seem to be any easy fixes that Symantec can apply to put its Enterprise Security business on better footing in such a competitive environment,” TheStreet said. “And the fact that management has to deal with an audit committee probe while it looks for answers is bound to make things even harder.”