Good day and welcome to Symantec's first quarter 2010 Earnings Call. Today's call is being recorded. At this time I would like to turn the conference over to Ms. Helyn Corcos, Vice President of Investor Relations. Please go ahead madam.

Thank you Tom. Good afternoon and thank you for joining our call to discuss fiscal first quarter 2010 financial results. With me today are Enrique Salem, Symantec's President and CEO, and James Beer, Symantec's Executive Vice President and CFO. In a moment, I will turn the call over to Enrique. He will start with a few comments about our quarterly activities and results, then James will provide financial and operational details, as well as discuss our guidance as outlined in the press release. Then will be followed by a question and answer session. Today's call is being recorded, and will be available for replay on Symantec's Investor Relations website. A copy of today's press release and supplemental financial information are available on our website and a copy of today's prepared remarks will be available on the Investor Relations website shortly after the call is completed. Before we begin, I’d like to remind you that our June 2008 period results included 14 weeks of activity versus the normal 13 weeks of the June 2009 quarter has. We outline the specific financial details of the extra week for you in our press release and supplemental information. Let me briefly review this with you. Non-GAAP revenue for the June 2008 quarter included approximately $75.0 million of a one-time benefit and non-GAAP earnings per share included approximately $0.03 of a one-time benefit generated from the extra week. Non-GAAP deferred revenue included a one-time negative impact of approximately $5.0 million from the extra week. We will exclude the impact of the extra week when comparing our June, 2009 guidance and results to the June 2008 results. Next, we will review our non-GAAP financial results focusing on constant currency growth rates, unless otherwise stated. For the March 2009 quarter, the actual weighted average exchange rate was…

Thank you, Helyn and good afternoon, everyone. Our ongoing focus on expense management resulted in earnings per share within our guided range. However, as of some our enterprise customers focused their spending on shorter term contracts, this resulted in reduced new license revenue in the period. Therefore, we ended our first quarter with lighter than expected revenue, but with a stronger deferred revenue balance. Deferred revenue remains strong as customers continued to renew their maintenance contracts. During the quarter, we focused on a small number of priorities and we laid the ground work to drive improved execution during the second half of the fiscal year. However, as our customers focus on purchasing fewer new licenses, this has put pressure on our ability to hold margins steady during the June quarter and has impacted our view of operating margins for the remainder of the fiscal year. In line with historical seasonal patterns, we expect our business to deliver better results during the second half of our fiscal year versus the first half. This is partly due to expectations that IT spending will improve in the December period, as customers spend to their annual budget targets. As such, we remain confident in our strategy and business plans, and will continue to focus on improving execution. Now, I would like to review the details of our results. Let me start with our consumer business, a bright spot for us in this period. I'm pleased with the performance of our consumer business. They delivered 6% year-over-year growth and grew nearly 3% sequentially. We're widely recognized as having the best consumer products on the market. Our Norton 2009 products have won over 130 awards globally. No other U.S. company has won more than a handful of awards for their comparable 2009 products. We're continuing to…

Thank you, Enrique. And good afternoon, everyone. Unless otherwise noted, please be aware that all of the growth rates I will be discussing have been adjusted to take account of currency effects and the extra 14th week of activity in the June 2008 period. GAAP revenue was $1.43 billion. Non-GAAP revenue was $1.44 billion, and declined 4% versus the June 2008 period. We saw fewer large transactions this quarter, as customers put the emphasis on maintenance renewals over committing to new licenses. It's important to note that the U.S. dollar strengthened 12% against the euro as compared to the year-ago period, reducing our international revenue as measured in U.S. dollars. As a result, foreign currency movements negatively impacted non-GAAP revenue by 5 percentage point's year-over-year or by approximately $75 million. However, currency affects positively impacted revenue as compared to the guidance we provided on May 6th. Had currency effects remained at our guided rate for the June quarter, non-GAAP revenue would have been $1.42 billion. In addition, to foreign currency effects, the June 2008 period had an additional $75 million of revenue from an extra 14th week of activity, whereas the June 2009 period consisted of the usual 13 weeks of activity. Looking at our geographic results, international non-GAAP revenue of $722 million declined 5% and accounted for 50% of total non-GAAP revenue. Asia Pacific Japan was up 1% while the Americas and Europe Middle East Africa region declined 3% and 7% respectively. Now, I would like to move on to our non-GAAP revenue by segment. The consumer business generated revenue of $453 million, up 6% versus the June 2008 quarter. Electronic distribution represented approximately 80% of consumer revenue. Results were driven primarily by strong activity from our subscription renewals, OEM partnerships and online channels. Norton 360 accounted for more…

Thank you, James. Tom, will you please begin polling for questions.

Yes madam. (Operator Instructions). We also ask you that you limit yourself to one question and one follow-up today. That is star one at this time to ask a question.

While Tom is calling for questions, I would like to update you on a few upcoming events. We'll be presenting at the Pacific Crest Conference on August 10th, at the Citigroup Conference on September 10th and at the ThinkEquity conference on September 16th. We'll be reporting our fiscal second quarter results on October 28th. For a complete list of our investor-related events and activities, please visit our events calendar on the IR website. Tom, we're ready for our first question.

Thank you. That question comes from Todd Raker with Deutsche Bank.

So, Enrique, if I look at the growth profile of Symantec today, clearly it's been disappointing, some of that is macro driven, but how much in your mind is competitive driven? And can you give us some insight in terms of where you think you stand competitively in the various business units and how we should think about kind of holes in the product portfolio or executional challenges going forward?

So, Todd, as I look at it, if I look at the consumer business, I'm pleased with how we did there. You know, the products are doing great. I mean we're widening our lead there. I mean, 130 awards for the Norton family of products. Clearly, I mean the very best on the market. And so I think we're doing well there. I think that team has put a beta out that is outstanding. I mean the initial review from PC Magazine is probably one of the best reviews I've seen in the last several years if not ever. So, I think that team is executing very, very well. If I turn my attention to the enterprise business for a moment, and I look at large enterprise, I think what I see is our security business specifically end point, the current version of the SEP is doing well. I had a number of displacements in the quarter where we've replaced competitors. And I think that is continuing to do well for us. I think the storage business in large enterprise, specifically we're definitely doing well. The most recent data from IDCU that was published in Q1 showed that we actually gained market share in Q1. That's the IDC data. And I think what we're seeing though is in large enterprise, that a lot of the contracts used to be a three-year kind of deal. We're seeing people buying licenses for one year at a time. And so that's specifically putting pressure on the business. But, I do see that we're performing well in large enterprise around storage. And if I move to the mid market, we shipped SEP small business last quarter. I think that that has been received well by partners. I think there's more work to do in SEP in the SMB segment with the SEP product line to get it into the marketplace, and to drive the adoption. And so, if I continue to see a place where we should see improvement over the next several quarters, it would be in the SMB segments. And that would be a place where I would tell you we've improved what we've got. Now, we've got to go close the business and I think you'll start seeing that results in a ratable nature given what I see the security business's current RevRec policy. So, my sense to it is, the biggest area for improvement that's in our control is in the SMB segment around our SEP offering and I think the products there, I think our partners and the reviews have been good. And now it's a matter of closing the business.

Okay. And one quick follow-up. What percentage of revenue in this quarter came off the balance sheet? I know you guys are guiding for 70% in the September quarter, but what was the metric this quarter?

That would have been just a little shy of a $1 billion or so would have come off the balance sheet.

And we'll take our next question from Sarah Friar with Goldman Sachs.

Good afternoon. Two questions for you. Enrique, as you look at the pipeline and what you're seeing in the business, do you think you're at a point where you're starting to at least see a trough or more stabilizing? And then I have a follow-up just on the year margin guidance.

I think when you look at our pipelines, I think our pipelines right now, we definitely see the ability to support the guidance that we've given. My sense, Sarah, is as I look at IT spending, I do think people are still looking for the short term ROIs. I don't think that that's changed in anything that I've seen in demand. I do believe that at least in some of the discussions I've had, that we will see a year end budget flush. How meaningful it will be is yet to be determined, but I do see some strength going into the back half of the year. But again, I'm comfortable with where our pipe lines are right now for the current guidance that we've given.

And we'll take our next question from Kash Rangan with Merrill Lynch.

Thank you very much. I was curious, if you could quantify SMB as a percentage of your security and compliance business unit just as to gauge how much of an incremental impact you could have with the SEP for SMB. Secondarily, if you look at the storage business, maybe that's where you're feeling most of the macro impact relatively speaking. We're hearing from other software companies that they're definitely starting to see some stability and potential signs of improvement. I was wondering if you guys are seeing that in a lagged way, you're not seeing that or perhaps you're seeing that but not quite confident that you want to talk about it on the conference call. Just give us some color commentary, as you look at the forward-looking tone of business and how some of the indicators might or might not improve. That's it for me.

So, Kash, on the first question, I would say roughly about 40% of the security and compliance segment is in the SMB. That's a rough number, and that will vary quarter-to-quarter. I think your comment is right on the storage and what we're seeing from a specifically kind of server sales, and how much incremental new demand is in the marketplace. I also think that in those agreements, customers historically, and when I say historically, prior to the last several quarters, had bought new licenses that were let's say for a three-year period. So, let's say that they were buying 1,000 new servers a year, they buy 1,000 agents for each of those second and third years. What they're doing now is they're saying I'm buying the agents for the current year and what I'm confident I'm going to deploy. So, that's the distinction that I think we're seeing in the difference. I think as far as demand, look, I think that as I talk to IT buyers around the world, they are definitely are interested in what we're selling. There's definitely demand. And I think that there is probably more confidence on the buying side. I think calendar Q1 was a quarter where we definitely saw buyers being a little bit more anxious. I think they have become a little more confident in the ability of their businesses to perform. I think there's definitely continued interest in both the secure and storage businesses. So, maybe that's what you're seeing or picking is that there is a little more confident in the buyer than we have probably seen in the first two quarters of the calendar year.

And we do have a question from John Difucci with JPMorgan.

Thanks. Just a quick follow-up there to Kash's question, Enrique, just so I understand this. So, people are buying less capacity. They're not buying future capacity. They're buying the next year's worth of capacity instead of the next three years' worth of capacity and because of that, you're seeing - it takes almost the same amount of costs other than the commission that you have to pay the salesperson. So, that's why that has a negative impact on margins. Do I have that correct? Because I didn't quite understand what you guys are talking about on the call until?

There's two components to it. I think you definitely hit, I think it is true. The expense structure will be nearly comparable. But, also you get a little bit less revenue yield, because you're basically saying you get the revenue for one year instead of getting revenue for years two and three. Because the way revenue recognition works is that if you get paid for the licenses, so let's say I buy the 3,000 agents for the three years, the 1,000 for each year, if that gets paid up-front, which is how customers have typically done it, we recognize that revenue in period. And so what it does is this effect of what we're seeing is the expense side of it is pretty comparable, and maybe a little bit different on commissions, as you said. But, the amount of license revenue in period is going to be a little bit lower.

And just one thing, because on this same subject, a couple of times, both you and James mentioned it. I just want to make sure because it almost sounded like you were paying and talked about maintenance mix and it almost sounded like you were paying similar commission rates on maintenance renewals as new license, and I just want to verify that that's not the case.

There are differences in what we pay ultimately and it varies not only by license versus maintenance, it also varies on what we do per segment. So, there is definitely differences. So, if there's something there that we should dig into on the statement we made, we'll look back at that but there are definitely differences.

And with the lower revenue that we reported in periods, absolutely came lower commissions.

And just one quick follow-up. And it’s surely goes on with a couple of the other questions, too. Because I just want to be clear here. The numbers coming out here really do imply that Symantec hasn't seen a bottom yet, because it looks to me, anyway, on an organic constant currency basis that your growth rates have declined and they continue to decline and they actually continue to whenever yet even looks sort of like it is going to get worse. So, you get a little confidence in it but in fact it is even a little bit worse than that. So, I mean obviously you're trying to do some things to change the operations of the company and improve the efficiencies but we're not seeing that yet either. Just curious, are there some secular issues in some of your businesses that just - I mean you can control some of the things but there's just something you just can't.

We spend time, analyzing what were all of the different dimensions of the business by product line, by segment. And I do think, as we look at the current environment, I don't expect that people are going to start buying years two and three again any time soon. I just don't think that's going to be a big change. And so that's one thing I would tell you that I think will be consistent probably through this year. And maybe we'll see a little difference in December. But in general, I don't expect to see a change there in the September the quarter, because they're going to do what they did in June as far as the term of the agreement

On that one point, because that's important. So that is in the guidance, but it wasn't I guess, in the guidance for the June period you had assume that they were going to continue to buy at I guess longer terms than they actually did.

Correct. Correct.

And we'll take our next question from Philip Winslow with Credit Suisse.

Hi, guys. Just a question back on license revenue. I guess that’s been an area of softness for a couple of quarters now. When you kind of look going forward, what do you think the license revenue growth rate is for the next couple of quarters and can we actually get back to the point of growing license revenue year-over-year and what do we really need to get that? Is it a turnaround in the small midsize business or is it some sort of stabilization in storage?

I think you're on the right point. I think we've got to see the SMB segment improve and I think in my earlier comments is that there is that there is a ratable nature to securities. So, as we start booking business in security, you'll see that in revenue over a period of time. I think that the other thing that is important for us to continue to do, to drive new license is we've got to do a better job, in my opinion, of cross selling the portfolio. We're in every major account in the world and we've got to get more of the portfolio and so that speaks specifically to one of the priorities that I've set for our team, which is on the integration of our technologies, and so how do we bring Enterprise Vault and Net Backup together. How do we bring Enterprise Vault and Backup Exec together. Because, what that does is we can go back into the base and sell those products. And so my sense, at this point, is the thing that's going to help us drive improved license is more work in the SMB segment and better cross selling.

And then also, just a sales force efficiency perspective, obviously you have a sales force and sales for storage and storage but then also product specialists. Would you ever consider splitting that sales force back up, sort of allow Symantec in [various task] focusing on storage, and then one on security?

I think that we're always look at what improvements we need to make and in the large enterprise, and the biggest customers in the world, we tend to really believe that you've got to have one account manager that's trying to work across the organization. That doesn't mean that there isn't an opportunity for - you called it splitting lanes, but having a group of people who just focus on security and a group of people that focus on storage. And so we're always looking at that. We've actually done a couple of tests recently that we've started to see if there is some improvements in overall sales productivity. But, it's something that we've done in very small areas. It is going to take us a little longer to determine if that yields inefficiency. So, I wouldn't expect anything like that as far as a change in this fiscal year, because these are the kinds of things that we have to measure very carefully. But, you're on the right theme, which is we're going to focus on how do we improve overall productivity at the company and how do we improve productivity in our sales and marketing functions.

And we'll take our next question from Rob Owens with Pacific Crest Securities.

Yeah, thanks. On the margin front, Enrique, you talked about five points in five years. And obviously this year is a bit of a reset, but is there still the focus around expense controls and revenue growth that should get you that type of target in your view?

So, Rob, I think at this point we absolutely believe that our goal as stated is 100 basis points of margin improvement per year. This year, I think you said it correctly, is that we're looking at a little bit different environment, and so the notion of 500 base points over a five-year period, starting from where we have currently set the expectations is what you should expect.

And then second, can you talk about the linearity in the quarter and just how it started versus how it ended?

Yeah, I think when you think about the linearity, this quarter tends to be fairly weighted toward the month of September, because specifically in Europe, you get significant holidays in both July and August.

I was referring to the June quarter. I'm sorry.

I'm sorry. I misheard you. So, in the June quarter, I don't think I saw anything dramatically different in the area. We keep very close eyes on that and I think the overall thing that I did see was what I had mentioned on the new license, but maybe James you have other data?

You saw obviously the year-over-year decline on a constant currency 14th week adjusted basis for Storage and Server Management group. A higher proportion of sales in that group tends to come right at quarter end.

And with regard to that you talked about shrinking duration. But you guys think you're seeing any deferral in front of the major upgrades that are coming in the second half to the storage business?

You know, Rob, the field hasn't commented on that. We're prepared for the Windows 7 migration. But, I don't expect that to start until potentially a few months after the initial release. What I'm hearing from a few customers is the concept that they may not wait for Service Pack 1 and given the work that we've done historically with our Altiris technology, I actually expect us to be able to be in a great position to help customers with that migration. Rob, I just want to go back on the first question you asked, just to make sure I'm clear is we're still saying that we're looking to drive 100 basis points of margin improvement on average over a five-year period, starting from this new reset point. And while this year, we're at the new levels that James described, that's our long-term goal.

And we'll take our next question from Brent Thill with Citi.

Hey, Enrique. Can you just comment on the international markets, obviously important stream of half your revenue. Do you see Europe bottoming out in the second half of this year? Do you still predicting a tough second half for Europe?

Yeah, I think when I look at it, you've got the - U.K. as a very financial services dominated market and so I think that that's going to continue to be a difficult market. I've also seen outside of Europe, seen some weakness in Japan. That market has been fairly sluggish and I don't know how quickly that's going to turn around. But, I think the U.K. definitely will continue to be financial service driven and that market is not as healthy as we've seen in the past. And I think, Germany also has struggled and we'll see how quickly that can turn around.

Okay. As a quick follow-up on the maintenance renewals, I think you said they were still strong, that now considering the shorter duration, is there more strain, as you go back to the renewal that you're seeing on some of the new cycles or is there really nothing new on the maintenance renewal side?

No, I'm pleased with the strength of the maintenance renewals. I think the price points and the actual renewal rate has actually been where I would expect, and has not changed from what we saw 12 months ago or in the June quarter of the previous fiscal year. The specific issue is more on the duration of new contracts.

We'll take our next question from Adam Holt with Morgan Stanley.

Thank you. Two questions about the consumer business. It sounds like you had a improved performance in the quarter, net the difficult comparison in currency. When would you expect to start to see the impact to some of the recent investment on the OEM side? And then secondarily, does the more conservative operating margin guidance include more aggressive investments in OEM deals or is it principally due to the revenue production?

Yeah, I think let me comment on the first. I think that we continue to work on the improvements, Adam, in the consumer business. I mean I think that team is product side strong and you should expect to continue to see us improve, what I would call the overall performance of that business on the financial side. But it is very ratable. So, everything that we do in consumer takes obviously a little bit longer to materialize, but I'm pleased with that performance. I think your comment about operating margins, I think what we're planning for really is the current environment, what you saw in licenses. And we wanted to make sure that we took into account what we saw in the previous quarter.

I just add to the first question, Adam, that the OEM arrangements that we've won in this past quarter that we noted and in the previous quarter as well, we have a very good batting average in the last couple of quarters in particular. They'll start to help us in the back half of this fiscal and then in the first half of the following fiscal year. So, the HP deal continues to perform well for us, obviously they've been taking share from Dell in recent times. And so we, continue to be pleased by the performance of that arrangement and that's been more of a driver of current performance.

And we'll take our next question from Walter Pritchard with Cowen & Company. Walter Pritchard - Cowen & Company: Hi, James. Just wanted to go back to the comment around the shorter term licenses driving part of the shortfall. I'm wondering first of all that was something that was seen both across security and storage or just security.

I would say it was a type of both of the businesses. So, we're seeing customers really taking the attitude that they'll spend on what they need for their more immediate needs. That's very much driven by budgetary constraints and those are impacting really all aspects of the IT department. Walter Pritchard - Cowen & Company: Got you. And then just relative to the accounting treatment on those licenses, I mean, they sound a bit to me like term licenses given that customers are buying multi-years and that's their option. But, yet it sounds like you take that up-front. My impression was the vast majority of your license revenue is actually perpetual in nature. And I guess just trying to understand the accounting treatment and then how widespread this type of licensing is within the base year of your license revenue.

You're right. We're generally talking about perpetual licenses. There are just in these smaller deals that Enrique has been referring to. They're just fewer of them, and so there's less take in period revenue. License commitments on a per user or a per server basis.

And we'll take our next question from Aaron Schwartz with Ladenburg.

Good afternoon. I just wanted to substantiate the comments you made about the pipeline in the license outlook. As you start to convert that pipeline of revenue and as the revenue environment gets a little more favorable, should we expect your model to become increasingly ratable, if you have some success in bundling transactions?

There may be some trend towards that but any movement there would be relatively gradual based upon the scale of our overall business.

Okay. And the second question I had was on the Altiris business, if you could just help us out in numbers of walking through the mechanics of that? Are most customers that have already purchased that current with the maintenance, so they wouldn't have to re-license the product around Windows 7 or does that have a lower maintenance attach-rate, where this would create a product cycle for you?

As I look at it, I'm pretty sure that our maintenance agreements around Altiris are consistent with the rest of our business. And so, I don't think I see anything that would indicate that customers would not be on maintenance. Now, we shipped the Client Management Suite and Server Management Suite for Altiris at the end of the March quarter. And so, we're just at the very beginning of what I would call the upgrade cycle to the 7.0 product. The other comment that I made today is that we still got one more component, the suite to ship that will complete the Total Management Suite. And so, my expectation is that we're still just at the beginning of that upgrade cycle.

Okay. And that should accelerate with the Windows 7 release?

I think that will motivate people to absolutely make sure that they're current and can use the new tools to do the migration.

And we'll take our next question from Brian freed with Morgan Keegan.

Thanks for taking my call. You guys have talked a fair bit about growing the SMB side of things. Can you talk a little bit about the impact of both gross and operating margins from a shift more towards a channel centric model and kind of what are your targets for business direct versus indirect outside the consumer side of things.

Well, the channel's always been a really important part of our overall distribution picture. And I would characterize what we're really speaking about here as getting back to the type of strength that we had in this domain 12, 18 months ago. So, I don't think that there will necessarily be a material shift around the margin profile of the business overall. I think we can do better in SMB now that we have our new product out there as Enrique said earlier generating very strong reviews, ease of installation is of particularly important aspect for small, medium size businesses, obviously. So, I think we've got some share to win back. We can do that with the new product that we have, and as we build that share, then clearly, that should help our margins to some degree. But, I think we're more returning to where we were in a competitiveness standpoint 18 months ago.

Okay. And do you have any specific targets for that mix over time?

The mix between the direct and SMB?

Between direct and chance driven.

I think when you think about our business, at this point, my expectation is that we are going to see an increasing percentage of our business go through the channel. And that's my expectation, that's the message that we've communicated internally and externally to our partners. And the reason is that given the breadth of our portfolio and some of the things that we are doing at this point, I'm convinced that our partners become increasingly important and that means that we'll see more business going through our channel.

We'll take our next question from Michael Turits with Raymond James.

Hey guys two questions. One on revenue, one on cash flow. On the revenue side, I just wanted to take another shot at second derivative question. Since some other tech and software companies seem to be seeing an easing of the declines or slight improvement, and you didn't, it got worse this quarter. Is it clear that your worsening is from macro or do you think it is worse than a competitive situation?

I think from a competitive perspective, we're in a good position, I'm very pleased. As I speak with our team, I definitely get the sense that people are very confident in the portfolio. We are seeing license weakness as we've talked about, and it's really driven by the duration of what people are going to buy right now. So, I would say it's best product we've had in a long, long time. And you know, the stop buying storage campaign, which drives sales of our storage resource management tools is building a very good pipeline.

And then, the question on cash flow, the maintenance is stronger than new license and deferred was actually pretty good this quarter. So, how should we think about what will happen with cash flow for the year? You would think that would look slightly better than what we would see on the income statement. I know you're going to have a higher cash tax rate, but ex that higher cash tax rate, can you give us any sense of direction on how cash flow might hold up last year to this year?

Well, clearly, the impact of lower license activity that we've been discussing thus far this afternoon, also feeds through into cash as well. Obviously, cash is always going to be lumpier from one quarter to another. But, as we were mentioning, customers are under their own budgetary constraints and they're buying more for their immediate needs, and so I think there will be a linkage between that thought and cash flow.

We'll take our next question from Daniel Ives with Freedman Billings Ramsey.

Can you just speak to the second half. You talked about re-acceleration and growth. And just talk about what's your profile we've seen on the top, as well as on the margin, where is Symantec sequentially throughout the year.

Sorry, I want to make sure I'm clear on the question. The profile.

Yeah, just you talked about second half re-acceleration. So, how should we think about, it ramping after we get through next quarter?

I think the way I look at it, and the way we've been thinking about it is we think that there is clearly - our business is seasonally driven into the December quarter and then we go into the March quarter which is our fiscal year end. And so, that's one of the things we're expecting. We're also expecting that the macro economic environment will still see a good year end budget flush, which we saw last year. So, I expect that to happen again.

Yeah, I would say that the March quarter is generally relatively flat versus the December quarter. It's the December quarter where we tend to see a more significant ramp up sequentially, both around top line revenue, around the margin generation capability, therefore as a company the two are clearly very much linked.

And just to get margins?

So, again, margins, I would expect them to be building sequentially between the September and December quarter, and then March to December, much more of a flatter to down. In this last year, we saw down sequentially between December and March, and I wouldn't be surprised to see the same type of pattern this year.

We'll take our next question from Steve Ashley with Robert W. Baird.

Just like to ask about the information management business. First of all, how that performed relative to your expectation. And if that business was also impacted by the license duration phenomena that hit the storage business?

Yeah, I think when you look at our business, the position that we have in the information management back-up and recovery is continuing to do well for us. Customers are continuing to move to the disk-based capabilities, our pure disk offering is doing well. We're also seeing that deduplication is very top of mind for customers. The work that we've done to move it closer to what people are trying to back up, so closer to the source, I think is proving to get people very interested in that technology. Now, there is the exact same impact because people buy and customers buy the backup agents and they're buying backup agents for their various servers. And so that definitely has the same impact that we talked about on the storage side.

Great. And then just maybe lastly, a housekeeping question, James, do you know what the FX impact was on operating expenses year-over-year?

Year-over-year? That would have been of the order of $50 million if I'm remembering that correctly. We can confirm that for you.

Tom, we're ready for our last question.

Yes, madam. And that question comes from Tim Klasell with Thomas Weisel Partners.

Okay. First question has to do with just a housekeeping one. How did Backup Exec do during the quarter since it's a more of an SMB focused product?

I think that when you look at it across the geographies, I think it was consistent with the last quarter, what we've seen. And you know, my expectation is we're in an upgrade cycle for that product as we go into the integration of some of the archiving capabilities. But, I haven't seen anything that's concerning NBE.

Okay. Glad to hear the maintenance renewals remain strong but are you seeing customers want to see shorter payment periods, particularly for the large maintenance contracts. For the maintenance, or let's say a large net back-up, three-year maintenance contract. Are you seeing them wanting to pay on an annual basis or seeing any impact there?

Well, maintenance is usually paid for on an annual basis, anyway so nothing really has changed in that regard, and we've been very pleased really with our collection statistics of various credit profiles with our customers. Well, thanks, everybody for joining us on the call today. We've clearly laid the ground work to drive improved execution and we're going to continue to focus on tight expense management. We are excited about the new products that we'll be shipping later this year. And some of the improvements and some of the products specifically are the consumer 2010 products, Backup Exec 2010, NetBackup 7.0 and the Altiris Total Management Suite. I look forward to providing you another progress report next quarter. Thank you very much.

This does conclude today's conference call. We appreciate your participation. You may disconnect at this time.