Symantec the Latest to Consider Breaking Up

By Jeffrey Burt  |  Posted 2014-10-08 Print this article Print
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Helping feed the trend toward big companies breaking up is Wall Street, according to Charles King, principal analyst with Pund-IT.

"The market has become so earnings-obsessed," King told eWEEK. "Companies that can't produce over-the-top earnings on a quarter-after-quarter-after-quarter basis get punished."

IBM saw this earlier than most and began selling off its low-margin businesses, including PCs and commodity x86 servers, he said. Other vendors—including Dell and Lenovo—appear to be doing well even as they build out their businesses.

Dell, being private, is not as influenced by the desires of the market. Private companies that show annual gains of 5 to 6 percent do fine, King said. Public companies have to shoulder the expectations of the market and shareholders, making the road forward a bit more difficult.

In Symantec's case, the company had made its name in security software, then in 2005 bought Veritas, a storage and backup vendor, for $10.2 billion. Symantec, like many tech firms, has been hurt in recent years by the contraction in the global PC market, and has seen revenues slow over the past several quarters. However, in the most recent quarter, the company's revenues increased 2 percent over the same period last year, to more than $1.73 billion, while income jumped 50 percent, to $236 million.

Symantec on Sept. 25 named Michael Brown—who had been serving as interim president and CEO since March—as the permanent CEO. In the release announcing the appointment, Symantec officials said Brown would talk with employees, customers and shareholders about his strategic plan for the company within 30 days. In a statement at the time, Brown said that Symantec officials are "focusing our investments in businesses where demand is greatest and improving operational efficiencies to grow revenue and operating margin."

Bloomberg News reported that one source said Symantec officials in the past had considered breaking up the company, and that Brown supports the idea. Two previous CEOs—Enrique Salem and Steve Bennett—said they wouldn't break it up, according to the report.



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