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Symantec, CommVault get revenue boost with backup and storage management software

Despite poor financial conditions, Symantec and CommVault report a strong increase in storage and backup software sales last quarter.

Symantec Corp. and CommVault Systems Inc. showed last quarter that customers will spend on software that helps them reduce costs and simplify management even during current financial conditions.

Both backup and storage management software vendors reported strong financial results Wednesday night, although Symantec tempered its expectations for this quarter.

Symantec executives cited backup and storage management as drivers in the company's solid revenue growth. The storage and server management segment racked up revenue of $573 million, up 12% since last year and representing 38% of Symantec's $1.52 billion revenue.

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CommVault reported revenue of $63.3 million, up 34% from last year and better than financial analysts expected. CEO Bob Hammer said revenue of CommVault's products outside of backup grew 76%. These products include archiving, single-instance storage and remote office products.

Hammer said in an interview with that his company saw little evidence of the spending slowdown that many storage vendors experienced at the end of last quarter when the economy tanked.

"We started strong and ended strong," he said. "The middle was not very strong, but momentum from the end of the quarter carried over into October. We continue to do well against larger competitors, like Symantec, and obviously took lot of market share."

CommVault still has a long way to go to match the storage software revenue of Symantec, IBM and EMC, but its results showed customers will turn to them for key technologies. "We saw new demand building and saw that companies will spend money to reduce operational inefficiencies," Hammer said.

Symantec CEO Enrique Salem told analysts that storage software sold well because it helps reduce spending on storage hardware, allows customers to implement and manage storage and server virtualization across heterogeneous environments and drives business continuity.

Symantec is bracing for economic conditions to have more of a drag on sales this quarter. Although the final quarter of the year is historically Symantec's strongest, the vendor gave a revenue forecast of $1.45 billion to $1.5 billion, which would be lower than last quarter and below analysts' expectation of $1.61 billion. Symantec CEO John Thompson said the company will also cut jobs by reducing head count costs by 4.5%.

"I don't think this is a time for us to be cavalier about our guidance and overly aggressive in forecasting what we think the macro economic environment might produce," Thompson said during Symantec's earnings call. "While I would never want to have this characterized as conservative guidance, we need to make sure, given what we observed at the end of the September quarter. We factor that into our thinking with respect to what could very well happen in December."

CommVault's revenue guidance of from $63 million to $65 million for this quarter was about as expected, although the vendor reduced the forecast slightly for its fiscal year that ends next March. For the year, CommVault's new guidance of $247 million to $250 million is down slightly from previous guidance of $250 million.

Symantec and CommVault pointed to new products they expect will help spur sales going forward. Salem lauded Veritas Cluster Serve One's high-availability and disaster recovery platform launched this month.

CommVault is on schedule to release the next version of its Simpana suite in the first quarter of 2009. Hammer said the next version will have block-level data deduplication, support for data dedupe to tape, the ability to manage workstations, desktops and laptops, and improved records management.

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