What partners need to know as Symantec flogs its name and enterprise division

Key points about the Broadcom/Symantec deal

After a month of toing and froing, Symantec has confirmed that Broadcom will be acquiring its enterprise division for $10.7bn (£8.9bn).

The final agreement is different to what was originally touted, with a deal for the entire Symantec business reportedly collapsing over differing valuations.

As part of the deal, the Symantec name will be transferred to Broadcom along with the enterprise assets, leaving behind the Norton consumer brand.

The announcement came as Symantec published its "better-than-expected" Q1 results.

On an earnings call, Symantec interim CEO Rick Hill talked through the rationale behind the deal. We've pulled out key information for partners.

The Symantec name is going to Broadcom

It is sometimes unclear what will happen to a company's branding when part of its business is sold off. But in this case, Symantec was clear that the name will travel with the enterprise division to Broadcom.

This will leave the original Symantec business with its Norton consumer name.

Computacenter's Williams said that having a clear distinction between the two names will ultimately be good for the enterprise division, explaining that there hasn't always been a clear distinction between the brands.

"They need to capitalise on the great name that they still have," he said. "The name still stands for something and resonates well.

"A re-energising is a good thing because the name hasn't run out of steam. If they can clear that up, it is positive and gives them focus - and shows people what they stand for.

"A lot of this will give them focus and allow them to capitalise on the good name they've had for many years."

Symantec is back in growth…

Symantec returned to growth in its Q1, after a period of ropey numbers.

For the three-month period ending 5 July 2019, sales rose eight per cent to $1.2bn.

Sales in the enterprise division rose just under 10 per cent to $611m, while in the consumer division revenue was up six per cent to $636m.

The pleasant results come after Symantec disappointed in its last financial year, which triggered the departure of its former CEO Greg Clark.

…but still cutting costs

Despite the news of the separation and the improvement in revenue, Hill said there is still work to be done to keep Symantec profitable in the long term.

The vendor announced a $100m cost-cutting exercise, which will see it reduce its headcount by seven per cent and close "certain sites". It said that around $75m will be spent on severance pay, with the remaining $25m linked to property.

Symantec's headcount is currently around 12,000 for the combined business, which it wants to shrink to around 10,000.

The aim for the standalone consumer business, it said, is to have an employee base of 2,500 in the long term.

This was (maybe) the plan all along

Activist investor Starboard took a stake in Symantec last year, and quickly moved to make its mark on the vendor.

The hedge fund gained a 5.8 per cent stake and installed three directors to the board a month later.

In May, then-CEO Clark stepped down and was replaced by Starboard's choice Hill.

It's not uncommon for activist investors to restructure a business before selling off various parts.

Computacenter's Williams said he had expected Symantec to go down this route all along.

"I thought if the original deal went through, the first roll of the dice would be to be a separate enterprise organisation," he said.

"It makes sense operationally and it makes sense from a messaging point of view and a focus point of view. The outcome that Symantec delivers can be well positioned if they do it that way."

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What partners need to know as Symantec flogs its name and enterprise division

Key points about the Broadcom/Symantec deal

Improved clarity is good for partners

Distancing itself from its consumer-focused sister could help Symantec obtain the clarity it needs to stabilise its enterprise division, according to Sapphire CTO David Lannin.

Sapphire is not a Symantec partner, but Lannin said that security vendors with both consumer and enterprise arms can muddy the waters for the channel.

"I'm not surprised. Just looking at how those organisations are placed, when they come from a consumer space they have to buy into the enterprise," he said.

"What I have seen with our experience with those types of vendors is that product lines will be introduced into the enterprise, they'll try to integrate and it will either be successful quickly or it'll take time.

"That can be a problem for resellers. We might sign them because we like the tech or because we were involved in it before the acquisition, and then it gets absorbed into the huge machine. They chew it over for a couple of years then spit it out.

"We have had the most success with the vendors that categorically don't have a consumer side, or it is so distant from the already established enterprise side that it engages with the channel properly. It is kept at arm's length or doesn't even exist. That is what works well in the security enterprise space."

There will be co-operation between the separated companies

Symantec's two divisions largely operate independently of each other, Hill said. However, there is a degree of crossover - particularly when it comes to SMBs - with the consumer Norton business offering a solution aimed at small business.

Hill explained that the consumer arm will continue to work with small organisations, and also partner with the enterprise division once it falls under Broadcom ownership.

"SEP goes into a control panel and it's ideally suited for enterprise applications where Norton Antivirus doesn't really do that, it's not as extensive," he said.

"Our focus and our definition going forward is the consumer marketplace and that market also includes small business, because we obviously have had a Norton small business product offering along the way.

"There's a clear delineation and I don't really envision a huge conflict because if you are in a large enterprise and you want to control end-point, you really require more ability to control it, where in the consumer it's the individual who is controlling it."

Hill also said that the two businesses will continue to share intelligence, particularly to help the enterprise division.

"The common thing is that they both provide valuable threat intelligence," he explained

"SEP (Symantec End-point Protection) provides threat intelligence in the enterprise environment, which I would classify as a more benign environment, because corporations are controlling cyber threats at multiple points in their network. Whereas in the consumer business consumers go anywhere on the net and therefore are subjected to more potential viruses that they can inadvertently bring into the corporation.

"We share that data. We will be sharing that data with Broadcom and our enterprise business to make sure all our customers, whether they were our former enterprise customers or our continuing and growing consumer companies, get the best engines and the best coverage dynamically, and I think it's a win-win for both companies."

Symantec still has tech

Despite regularly being used as the archetypal example of a legacy, dinosaur anti-virus company that cannot keep up with emerging cloud-based players like CrowdStrike, Computacenter's Williams claims that Symantec still has technology that can compete with the shiny new players - it just needs to position itself better.

"There are lots of people telling the same story," he said. "It is the same irrespective if you are Symantec, CrowdStrike or Check Point. They're all trying to answer the same exam question in different ways.

"It's about having a well-put-together strategy to address the problems in the enterprise world. What they require is an absolutely razor-sharp focus and it sounds like they may get it from this change.

"They have all the technology to compete with anybody."