As organizations grow they sometimes branch off into different but related businesses. That can cause divisions as executives fight for resources. The solution is an amicable divorce that (hopefully) satisfies executives and shareholders.
Symantec Corp. is the latest to turn to that strategy, announcing Friday that its board has unanimously approved a plan to separate the company into two, independent publicly traded companies: one business focused on it’s well-known business and consumer security products and services, and the other on its information management portfolio, which largely is based on Symatec’s 2005 acquisition of Veritas Software.
“As the security and storage industries continue to change at an accelerating pace, Symantec’s security and IM businesses each face unique market opportunities and challenges. It has become clear that winning in both security and information management requires distinct strategies, focused investments and go-to market innovation,” CEO Michael A. Brown, said in a statement. “Separating Symantec into two, independent publicly traded companies will provide each business the flexibility and focus to drive growth and enhance shareholder value.”
The spinoff is expected to be completed in December, 2015, a decade after the $13 billion Veritas deal was announced.
Forrester Research analyst Henry Baltazar suggested the liberated storage division might be ripe for acquisition by a competitor. “Storage is moving away from appliances and towards software-only storage. Symantec’s storage assets would be easier to acquire without the security business because its backup and archive solutions could flesh out a vendors software defined storage portfolio.”
Stephanie Balaouras, a Forrester vice president and research director covering security and risk, noted that “Symantec never delivered on any of the integration between security and IT operations that it promised were in the works” with the Veritas acquisition. “And at the time of acquisition, Veritas was not only the leading enterprise backup vendor but also had the leading volume manager, file system, host-based replication, and clustering technology in the market, but the latter products have all since had limited success as technology has changed.”
Meanwhile, he said, the IM spin off, is a great leadership opportunity for John Gannon, who will become its general manager, and Don Rath, who will be acting CFO.
Both have extensive leadership experience to move the company forward, Monahan noted. It will be well funded with over $2.5B in revenue and already has market leadership in backup and recovery.
He also agreed that — if it isn’t saddled with debt — the IM company will be ripe for a takeover.
The security business generated revenue of US$4.2 billion in fiscal year 2014. It will include: consumer and enterprise endpoint security; endpoint management; encryption; mobile; Secure Socket Layer (“SSL”) Certificates; user authentication; mail, web and data center security; data loss prevention; hosted security; and managed security services.
The unnamed information management company will include backup and recovery; archiving; eDiscovery; storage management; and information availability solutions.
