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Symantec is joining the growing ranks of large tech vendors that are breaking apart in hopes that creating two more narrowly focused companies will lead to greater success in their respective markets.
Symantec executives on Oct. 9 confirmed reports this week that the company will split into two publicly-traded companies, one concentrating on security software and the other focused on data storage and information management.
The announcement comes three days after Hewlett-Packard CEO Meg Whitman said the tech giant will become two—HP Inc., which will sell printers and PCs, and Hewlett-Packard Enterprise, which will focus on IT solutions and services. eBay officials on Sept. 30 said the giant online auction site will shed its PayPal online payment processing system, creating two companies.
Some industry observers have noted that the recent announcements and the pressure on other companies—including data storage giant EMC—to split off some businesses is an indication that it’s becoming increasingly difficult for such large and diverse vendors to adapt and react in a fast-changing industry. It also is a product of growing pressures on public companies from Wall Street and shareholders to show strong financial results every three months.
That said, other companies—including Cisco Systems, Oracle and Dell (now a private company)—continue to broaden their portfolios and grow through acquisitions.
In Symantec’s case, the company had built its reputation on its security software, then extended its reach into data storage and information management by buying Veritas for $10.2 billion in 2005. Symantec executives and directors in the past reportedly had considered breaking the company apart, but previous CEOs were against the idea. Michael Brown, who was named permanent president and CEO in September after serving in the positions in an interim capacity since March—has favored a breakup.
Splitting the company in two will give each business a better chance of competing in their respective markets, Brown said in a statement.
“As the security and storage industries continue to change at an accelerating pace, Symantec’s security and [information management] businesses each face unique market opportunities and challenges,” the CEO said. “It has become clear that winning in both security and information management requires distinct strategies, focused investments and go-to market innovation. Separating Symantec into two, independent publicly traded companies will provide each business the flexibility and focus to drive growth and enhance shareholder value.”
After the split, Brown will remain president and CEO of Symantec and Thomas Seifert will continue at CFO. John Gannon, who before coming to Symantec had served as president and COO of Quantum and before that had led HP’s commercial PC business, will become general manager of the new information management business. Don Rath, a two-year veteran of Symantec, will be the new venture’s acting CFO.
Symantec’s security business, which generated $4.2 billion in revenues in the company’s fiscal year 2014, is competing in a market that officials said will grow to $38 billion by 2018 and offers a unified security strategy that includes a platform that integrates threat information and analyzes data from its security products and Norton endpoints.
Symantec to Split, Create Security, Storage Companies
The company also will grow its cybersecurity services as well as simplify and integrate its security products portfolio via the integration of its Norton offerings and by bringing its advanced threat protection (ATP) and data loss prevention (DLP) into more of its products, according to officials.
Symantec’s move to make its security products a standalone business makes sense to at least one of its competitors.
“The security market is changing dramatically,” Marcin Kleczynski, CEO of Malwarebytes, said in an email to eWEEK. “Cybercriminals and nation-state hacking groups are innovating at a furious pace and traditional security companies, often burdened with layers of bureaucracy, are struggling to keep up. Imagination, evolution and being nimble are now absolutely vital to getting the cutting edge in this market. This is why smaller specialized companies are flourishing in malware detection and response.
“The decision to split Symantec in two is a perfect example of this need for focus in the security sector. By freeing itself from the distractions created by trying to capture a variety of markets, Symantec can be more single-minded in their response to the ever advancing threat landscape.”
Symantec’s information management business generated $2.5 billion in revenue in FY 2014, and also has three goals as a new, independent company. That includes building up its product portfolio for both on-premises and cloud environments, as well as reducing the cost to customers of storing and managing its information and gaining insight from it. To that end, the company will integrate its products with cloud providers to enable users to manage data across public and private clouds. The integration will include offering NetBackup and recovery-as-a-service solutions for Microsoft’s Azure Cloud, officials said.
In addition, the information management company next year will deliver an intelligent information fabric that will enable customers to see a map of their information to better secure the data, they said.