Symantec released their quarterly earnings today, which is the sort of thing we usually ignore. Especially because it’s only the third quarter, and not even a playoff game (I really need to hang out with Mike less). However…
The learning period is over for new CEO Steve Bennett, and he is starting to implement his game plan. There shouldn’t be any surprises considering his background at GE – the focus is on streamlining, realigning assets, and reducing workforce cruft – especially in the middle and executive management levels. Talk is cheap and change is hard, so Bennett has his work cut out for him.
The strategy of executing better in the field and with product delivery isn’t without risk. But it’s not like they really had a choice. Their sales costs were much higher than comparables in the industry, so that needed to be fixed. Organic innovation and acquired product integration have been problematic for years. At the same time Symantec drank at the trough of high multiple M&A to drive revenue growth, but too many of those deals didn’t pan out. So the focus will be on the stuff they already have, and even if they do more M&A given the return of capital to shareholders (in the form of a dividend and stock buyback), you’d look for lower priced and accretive deals. One message came across loud and clear: Don’t expect short term magic. Bennett managed expectations that this would be a multi-year process.
What does this mean to you?
SMB is now tied to consumer, not enterprise. That makes sense on the surface but is likely a tricky move under the covers, depending on where they draw the SMB line. Especially as more and more SMB customers look to the cloud for key services like web and email security and backup. On the enterprise side there will be some turmoil as they move BUs around, focus on profitable products, and perhaps start dropping distractions. This usually slows innovation, despite saying they are investing more into R&D. For most of you this won’t mean much yet, except that you should expect deck chairs to move even in the middle of deals. I don’t expect significant changes in the main product lines, and there is some base there to build on – per the article:
The company also plans to increase research and development into areas such as mobile workforce productivity, data center security, integrated backup, information security services, cloud-based information management, and identity and content-aware security.
Symantec really struggled with focus for a long time. They have started to clean that up, but nothing that big turns quickly. Mike might have more to add, but most of this won’t affect the enterprise business too much unless they decide to dump something big, and there’s no question they will be dumping little things that aren’t profitable enough. We don’t think they know what won’t make the cut at this point, but clearly some stuff will need to go. I suspect the SMB re-org/transition will be messy, but Symantec hasn’t had much of a strategy or success there for a while anyway.
Basically, they are moving to address issues that the entire market has been pointing out for years. That should be good news to those Symantec faithful, and business as usual for everyone else.