on October 08 2014 8:52 AM
Symantec Corporation could be the latest major tech firm to break itself apart, following in the steps of both eBay Inc. and Hewlett-Packard Co., with an announcement just a few weeks away, Bloomberg reported Wednesday.
Symantec declined to comment on the report. “Symantec does not comment on rumors or speculation,” Symantec representative Noah Edwardsen told International Business Times in an email.
But the Mountain View, California-based company is said to be looking to split its business into two entities, with one that sells security programs and another that does data storage, according to Bloomberg, citing people with knowledge of the matter.
“The pros of a breakup are conducive for shareholders only if the two companies will be able to offer better solutions, and then grow their bottom line,” Adam Sarhan, founder and chief executive officer of Sarhan Capital, said.
Although Symantec, known for its Norton antivirus software, helped pioneer anti-hacking technologies in the 1990s, the company has faced increasing competition in the security industry and has struggled in recent years to revitalize revenue growth. Despite hurdles, Symantec beat Wall Street expectations in August after posting a profit of $236 million, or 34 cents per share, during the company’s fiscal first quarter, compared with $157 million, or 22 cents a share, a year earlier. Revenue rose 1.8 percent to $1.74 billion.
The company has also seen an abrupt change in management over the last year. Michael Brown, who previously served as CEO of Quantum, was permanently named CEO in September. Brown joined Symantec’s board after the company acquired data-storage maker Veritas Software Corp. for $10.2 billion in 2005.
Since the Veritas merger, multiple Symantec CEOs have discussed whether to split the company, including former CEO Enrique Salem, who left in 2012, and Steve Bennett, who was ousted in March 2014. Although Salem and Bennett both said they would not split up the company, Brown reportedly does support a breakup, Bloomberg said.
“The con is that the breakup dilutes the competitive advantage of the current company and neither spin off will be able to survive on its own,” Sarhan added. “Since internet security is a huge and growing business, they need to continue to innovate and stay ahead of the curve. If not, they will not be able to thrive as one company or two companies.”
The news follows a growing trend in the last few weeks of technology companies spinning their assets into two. EBay Inc. announced last weekit plans to separate its PayPal unit into an independent publicly traded company in 2015. In addition, Hewlett-Packard Co.’s said earlier this week the company plans to split its personal computer and printers businesses into one entity.
Looking ahead, Symantec is scheduled to report fiscal 2015 second-quarter earnings on Nov. 5 to discuss the company’s latest results with shareholders. Following the news, Symantec stock rose 1.42 percent in mid-day trading on Wednesday to $23.53.
Adam Sarhan IBTimes.com Quote: Symantec Corporation Said To Weigh Breakup, Separating Security, Storage Units
on October 08 2014 8:52 AM