Symantec Security, Storage Breakup Has Partners Holding Breath


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In a move that brings a sense of deja vu, Symantec is officially breaking up, splitting into separate security and storage companies in a move that effectively undoes its $10.2 billion 2005 acquisition of storage vendor Veritas.

The decision to pursue the separation follows an extensive business review of the company’s strategy and operational structure, Symantec said in a statement issued Thursday after the close of the financial markets.

"Separating Symantec into two, independent publicly traded companies will provide each business the flexibility and focus to drive growth and enhance shareholder value," said Michael Brown, president and CEO of Symantec, Mountain View, Calif., in the statement. "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."

Symantec is the second major IT vendor to announce a split this week. Hewlett-Packard Monday unveiled plans to break into two publicly traded companies: a $56 billion PC and Printing business and a $56 billion enterprise computing business.

The new information management business would consist of Symantec's backup and recovery, archiving, eDiscovery, storage management, and information availability products. The security business consists of Symantec's endpoint security and management products, data encryption, mobile, SSL, authentication, mail Web and data security security, data loss prevention, hosted security and managed security services.

The breakup will likely take more than a year,with completion expected by December of 2015. During the separation, Brown will be president and CEO of the security business and Thomas Seifert will be its CFO. John Gannon, who served as president and COO of Quantum and led HP's commercial PC business, will be general manager of the information management business.

Symantec acquired data storage vendor Veritas Software for $10.2 billion in 2005. It struggled to integrate it into the portfolio and speculation began several years later about spinning off the company's data management business. About 50 percent of the company's revenue is generated through its storage business, 25 percent through its Norton consumer endpoint security business and 25 percent through enterprise security sales.

The combined company suffered because it took two entirely different skill sets to sell storage and security products, said David Sockol, president and CEO of security consulting firm Emagined Security. Splitting the company in two could create a dedicated sales department for each side and enable security solution providers to speak with in-house sales and support staff knowledgeable in security or storage, he said.

"This huge portfolio that they have grown has been a tremendous challenge," Sockol said. "I expect splitting will be a huge positive impact for partners on both sides of the portfolio."

Symantec has been in a constant state of flux for several years, starting with the tenure of Steve Bennett, who was fired in March after leading a complete overhaul of its internal sales teams and product strategy. The changes, while seen by channel executives as a good move financially, resulted in sluggish sales growth in a hot security market. The upheaval resulted in a drumbeat of senior management departures including two of the company's senior-level channel executives. 

The breakup will be good for those that specialize in either security or storage, some Symantec partners told CRN. The largest partners that sell products from both sides of the company's portfolio say it could make it more difficult to work with the company. The impact will be felt twice, said Daniel Duffy, CEO of Valley Network Solutions, a Fresno, Calif.-based Symantec partner that also sells the company's backup and recovery products.

"I'm not thrilled about his but will I will take a wait and see attitude, Duffy said. "For us the value of Symantec in part has been the fact that they bring these collective pieces to the table and the ability to have one vendor for both simplifies a lot of things for customers and partners."

NEXT: Will The New 'Symantecs' Be Snapped Up By Rivals?

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