Bank to help Symantec draft brighter future

JP Morgan enlisted to map a path ahead for troubled security and storage vendor

Symantec's board and management are not waiting for the chorus of shareholder activists and industry analysts to call for its break-up. The security and storage software vendor has reportedly enlisted the help of JP Morgan to help chart its future course while it searches for a new chief executive.

The hiring of an investment bank is something Symantec has done during times of duress. The company is under increasing pressure to demonstrate an ability to return to growth and craft a plan that will restore confidence in its operations.

The company's string of losing or flat financial statements have some shareholders and analysts calling for breaking up the company into its component parts.

According to a report in Reuters, Symantec's immediate concern is that its management shake-up may attract more activist investors who would put more pressure on the company to change and produce returns without regard to long-term interest.

The management shake-up began last month when Symantec's board of directors shocked the market with the sudden and unexpected firing of its chief executive, Steve Bennett.

On the job for less than two years, Bennett was leading a long and drawn out transformation of the company, dubbed Symantec 4.0, a term reflecting the company's different epochs.

Bennett's vision was to streamline Symantec's operations through a series of reorganisations, staffing and budget cuts, and realignment of products. Under Bennett's watch, Symantec essentially withdrew from the cloud backup segment and trimmed sales for its other products.

Symantec 4.0 was a response to the stagnation that beset Bennett's predecessor, Enrique Salem, who was ousted from the CEO posts in 2012 after the company posted just one per cent growth for the year and showed no prospects for improvement.

Initially, Bennett's failure was placed on declining PC sales - particularly in the consume segment - that dragged down sales of Symantec's flagship antivirus products. However, subsequent reports place greater blame on Bennett's policies that disrupted partner and customer relationships and curtailed sales.

The hiring of an investment bank to guide future direction is not a good sign for Symantec. In recent years, many partners, customers and investors have question the wisdom of the 2004 acquisition of Veritas, which transformed Symantec into a hybrid software house.

The deal has never returned the promise integrated systems, increased sales or value.

This results in periodic calls for Symantec's breakup into its respective divisions - security, storage management and systems management.

Unclear is whether Symantec's board is ready to concede a breakup. Bringing in JP Morgan may be an indication that Symantec wants to remain whole and is searching for options.

The challenge facing Symantec isn't so much the value proposition to Wall Street as much as the value proposition to customers.
The real reason Symantec has struggled in recent years isn't so much the value of its products, although it has had some challenges on the security side, but rather in crafting a cohesive value statement that brings all its products together.

Symantec's product portfolio is broad, diverse and complex. Few partners are able to sell the full line-up, and even fewer make a business out of holistic Symantec implementations. The challenge is so great that Symantec discourages partners from attempting too much when adopting products and specialisations.

Questions of value, potential return and future viability will continue to dog Symantec until it's able to resolve the basic question of how its various components come together to equal a sum greater than the parts. Unless that happens, Symantec will continue to hear the calls for a break-up.

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