After delivering a weak financial forecast today, Symantec Corp. is looking for a CEO to replace Michael Brown -- who is stepping down. If you read Symantec's spin on the situation, you'd think the company is in great shape. The official announcement said, "Symantec Announces CEO Transition Plan Following Company’s Successful Move to Focus Exclusively on Cybersecurity."
Really? Here's what Symantec forgot to say:
- Bad M&A Execution, Part I: The company in 2004 announced plans to acquire Veritas -- the storage company -- for $13.5 billion. I admit: I liked the concept of storage and security company together under one roof. Partners could potentially profit from data and information protection. Only problem: Symantec and Veritas never really came together.
- Missed Technology Waves: Symantec largely missed the transition to mobile and cloud computing. And the Symantec-Veritas combo never really took hold. As cloud storage and cloud security businesses expanded, options like the Symantec Protection Network stumbled from the gate.
- Strained Partner Relationships: John Thompson, the architect of the Symantec-Veritas deal, retired from his CEO post in 2009, transitioning the position to Enrique Salem. But that Salem started the job in 2009 with a major strike against him. In 2008, he essentially told Wall Street that he planned to take certain business direct. Some partners never forgave him, even as Symantec tried to put a positive spin on the story. And channel chief Julie Parrish (now at Check Point Software) was left in an awkward position trying to defend Symantec's partner program.
- Bad M&A Execution, Part II: By 2015, Symantec finally realized that the decade-old Veritas deal didn't pay dividends. So it was time to spin the business back out. But Symantec was forced to lower the sale price for its Veritas data-storage unit to $7.4 billion from $8 billion, due to strains in the debt market, notes Forbes.
Leapfrogged in the Channel: The list of security and storage companies that now thrive in the channel -- particularly in the SMB segment served by MSPs -- is quite long. Symantec never quite clicked with the MSP masses.
Glass Half Full?
Still, this isn't a train wreck situation. Symantec competes in a hot market that will surely continue to grow. Despite a weaker-than-expected revenue and profit forecast today, the company still generates reasonable profits that it can invest back into the business -- either for organic R&D or M&A.
Describing its quarterly financial outlook, Symantec said:
- Revenue is now expected to be $873 million compared to previous guidance of $885 to $915 million.
- The Company expects fourth quarter non-GAAP operating margins and EPS of 25% and $0.22, below its previous guidance of 26% to 28% and $0.24-$0.27.
Symantec blamed the weakness on a faster-than-expected shift from traditional software licensing to cloud and SaaS subscriptions. Um... the shift has been building for more than a decade. Everybody saw it coming. Except those who were addicted to traditional software licenses.
Office of the President?
The other thing that worries me: Symantec formed an Office of the President until a new CEO joins the company. The office includes:
- Ajei S. Gopal, who is joining the Company as Interim President and Chief Operating Officer;
- Thomas J. Seifert, Symantec’s Executive Vice President and Chief Financial Officer; and
- Scott C. Taylor, Symantec’s Executive Vice President, General Counsel and Secretary.
The Office of the President is expected to remain in place until a new CEO has joined the Company. The last time I saw a similar move, Novell formed an Office of the President in the early 1990s -- as part of a move to help transition from the aging Ray Noorda to a new generation of leadership.
Let's hope Symantec ages a bit more gracefully than Novell did...