Analysis Multiple reports say Symantec is thinking of splitting itself up into separate security and storage businesses.
Symantec bought Veritas for a massive $13.5bn in 2004, promising synergies between its existing security business and Veritas’ backup and storage management software. The synergies didn’t appear and Symantec's storage business has lacked any form of lustre, as has its security business recently.
Revenues went down from fiscal 2013 ($6.9bn) to $6.7bn for the full year 2014, and profits were lower in both 2013 and 2014 than in 2012.
It is still one of the largest supplier of storage software, with IDC giving it 13.3 per cent of a $3.8bn market, following IBM with 16 per cent and EMC with 25.9 per cent. However, security revenues have been impacted by the rise of tablets, which don’t use it, and the fall in PC sales, which do.
The firm recently changed CEO, with board member Michael Brown replacing Steve Bennet. His job was to get the company growing again after Bennet, hired to do the same after prior CEO Enrique Salem was given the elbow, failed to do just that.
The board had reportedly hired JPMorgan Chase to look at strategic options for Symantec in April this year, shortly after Bennet was booted out, and while Brown was the interim CEO.
"The Whale Beached between Scheveningen and Katwijk, with Elegant Sightseers," by Esaias van den Velde, c.1617
Bloomberg and other media outlets are reporting that Brown now wants to unravel the Veritas acquisition and have two nimbler and more focused businesses.
Ironically, Symantec’s chairman is Dan Schulman, president of the soon-to-be-spun-off PayPal.
It seems to be the splitting season:
- HP is going to split into an enterprise systems business and a PCs and printers firm
- eBay is selling off its acquired PayPal unit
- IBM has sold its X86 server business to Lenovo
A hived-off Symantec storage business would have revenues from legacy data protection products, such as Backup Exec and NetBackup, but would need far-sighted and bold decisions to enable it to take advantage of server-side storage — where all the growth is these days.
Copy data management is another promising area (Actifio, Delphix) as is replication-based protection — think Zerto.
The security business also needs a shake-up, as legacy PC anti-virus is not a growth business at all. However, there are still lots of opportunities as security breaches are as regular as rain storms.
Symantec’s problem has been inadequate management responses to changes in the security and storage markets. Splitting it into two, smaller but still beached whales will alter nothing – unless management changes and gets dynamic new blood in to replace the execs currently in place. ®