Watch for calls to break up Symantec

Former Symantec CEO Steve Bennett

Former Symantec CEO Steve Bennett

Symantec Corp. is looking for more than a new leader – the company wants a new direction. The sudden ouster of CEO Steve Bennett revealed his vision for a streamlined “Symantec 4.0” was taking too long to take shape and wasn’t leading the security and storage software company to a new, better place in the market.

And that’s been the longstanding problem at Symantec: security and storage.

Now, analysts and investors are contemplating breaking up the company either through spinoffs or divestitures, ending the experiment started a decade ago by former CEO John Thompson.

Breaking up Symantec isn’t a new idea. Since 2010, analysts and investors have called for Symantec to divest its underperforming assets and refocus on a definable product line and market strategy. The rationale, from an investor perspective: It would result in a capital gains from the sale or spinoff and a lift in the value of the remaining company — at least temporarily.

“We think all strategic options are on the table including the sale or potential divestiture of underperforming assets. We are lowering our estimates to what we believe are trough levels. We see M&A or divestiture as likely scenarios owing to the secular decline in endpoint and storage businesses, which combined represent a majority of the business,” BMO Capital Markets wrote.

Some see the divestiture of assets, such as the former Veritas unit or Altris configuration management division, as a means for Symantec to raise cash for acquisitions with closer alignment to its core security offerings.

The reason this all keeps coming up is that Symantec, in its current form, has never made sense — even to the people running the company.

Nearly 10 years have passed since Symantec plopped down $13.5 billion to acquire Veritas Software in what was the largest tech deals in history of the market. The combination of the two companies was supposed to create a powerhouse of data security and integrity products, and lay the foundation for further expansion into hardware, services and cloud computing.

Spoiler alert: None of those things happened.

Symantec did grow revenues, and, arguably, Veritas has thrived under the merger. However, the two companies, as well as other acquisitions to complement the security and storage products, have never gelled. Managers and rank workers still identify themselves as “Original Symantec” or “Legacy Veritas.”

Worse, the market hasn’t clearly expressed what Symantec does or is supposed to do. Symantec is a security company, providing network and endpoint protection against malware and unauthorized users. Symantec is a storage company, providing products that manage data repositories. Symantec is a systems management company, ensuring devices and software are properly tuned for optimal operations. Symantec is an identity management company, providing encryption and authentication products to safeguard access.

Symantec is everything and nothing. No story can encapsulate everything the company does because not everything fits together in a consistent continuum.

The same internal identification problem is seen in the Symantec channel community. Symantec has some of the best-performing partners in the business because they choose to focus on technology segments and not the whole portfolio; few actually represent the breadth of Symantec’s products or capabilities.

Reflecting the challenges of its disparate product portfolio is Symantec’s efforts to rein in partners from taking on too much. In 2011, Symantec started discouraging partners from trying to expand across the various product units after solution providers started failing or marking declining performance. The company encouraged partners to focus on individual product segments and expand only into adjacent offerings to avoid overextension.

It is too early to predict the likelihood of a Symantec breakup. What’s clear, though, is investors and the market are tired of waiting for the new Symantec vision to come into focus. Whomever the new leader is, he or she will be faced with the daunting tasks of crafting a narrative around this collection of products and making it into a company.

It could very well be that “Symantec 5.0” is like IKEA furniture — a functional product with lots of leftover parts.

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