* Q1 non-GAAP revenue $1.4 bln vs $1.5 bln Street view
* Q1 EPS ex items 34 cents vs Street view 36 cents
* Sees Q2 non-GAAP revenue below Street View
* Shares fell 7.5 percent in extended trading (Adds comments from company, analyst, byline)
By Jim Finkle
LAS VEGAS, July 29 (Reuters) - Security software maker Symantec Corp (SYMC.O) reported a steeper-than-expected drop in quarterly profit, saying its average deal size is shrinking.
Its shares fell 7.5 percent after-hours.
Customers of the world’s biggest security and backup software maker are choosing to buy only as much software as they currently need, a change from previously when they bought enough to meet their needs for several years, taking advantage of bulk discounts.
“What we see is shorter-term contracts,” Chief Executive Enrique Salem said in an interview. “We don’t expect that to change in the September quarter.”
Net income for the second quarter fell to $73 million, or 9 cents per share, from $172 million, or 20 cents, a year earlier.
Excluding items, the company earned 34 cents per share in its first quarter ended July 3, missing the Wall Street average forecast of 36 cents.
It was the third time the company’s results have disappointed investors in five quarters, a history that has caused its shares to underperform those of rival McAfee Inc MFE.N, the No. 2 security software maker.
Symantec’s stock has fallen 10 percent over the past year. In contrast, shares in McAfee, which will report results on Thursday, have climbed 37 percent over the same period.
“Execution is something they should improve,” said Daniel Ives, an analyst with FBR Capital Markets.
Salem said he expects businesses will continue their just-in-time buying pattern for at least the current quarter. He also issued an earnings forecast that missed Wall Street projections.
The company forecast second-quarter non-GAAP earnings per share of 32 cents to 34 cents on non-GAAP revenue of $1.4 billion to $1.45 billion. Analysts, on average, had been forecasting earnings of 36 cents per share on non-GAAP revenue of $1.5 billion, according to Reuters Estimates.
First quarter non-GAAP revenue, which excludes deferred revenue related to acquisitions, fell 13 percent to $1.44 billion, missing the forecast of $1.5 billion.
Sales at the Symantec division that sells storage and backup software fell 17 percent, sales of business security software dropped 14 percent and consumer product sales declined 4 percent.
Shares of the Cupertino, California-based company fell 7.5 percent to $15.95 in extended trade. They closed up 4 cents at $17.24 on Nasdaq. (Reporting by Jim Finkle; Editing by Richard Chang; and Carol Bishopric)