Partners Hail Potential Symantec Storage, Security Breakup

Symantec reportedly is in advanced talks to split the company into separate businesses, a move that some longtime partners specializing in specific IT management and data security technologies view favorably.

Citing an anonymous source, Bloomberg reported Wednesday that the Mountain View, Calif.-based company could make an announcement in the next few weeks. News of the potential breakup lifted Symantec stock nearly 2 percent in early trading Wednesday. The company is valued at $16 billion and financial analysts agree that the already completely overhauled sales operation and downsizing have placed Symantec in prime position to break up its business units.

"We believe splitting up the company would lead to a stronger focus resulting in streamlined activities with higher growth and improved margins," according to financial analysts at Sterne Agee. "With the sales force split now effective, we believe that a lot of the heavy lifting toward a breakup has already been done and it makes sense to move forward to unlock more shareholder value."

Some Symantec partners question the timing of the leak and tell CRN that the company has pushed back some product releases while it searched for a new CEO. The company named Michael Brown, a former Veritas executive and current member of the company's board of directors, as its CEO late last month.

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A breakup could make the company more nimble and provide much-needed funds for research and development of new product offerings and improvements on platforms that have stagnated in recent years, said Kevin Wheeler, founder and managing director at Dallas-based information security services company InfoDefense.

"Symantec's future is more in security than it is storage," Wheeler said. "Symantec's effectiveness in the security market isn't what it should be judging by the solid quality of their products."

Many of the leaks are associated with the rumor mill, said Alex Moss, a managing partner at Chicago-based security consultancy and Symantec partner Conventus. Selling off pieces of the business also could produce the cash necessary to invest in automating and integrating some security products, Moss said.

"It's a great company that has suffered because of its size," Moss said. "It's really anyone's guess as to what could happen."

Partners have heard rumors about breakups for five years or more, following concern that Symantec's acquisition of storage giant Veritas was not working out. There always has been tremendous pressure to split things up to run more efficiently, which tends to be distracting, said Paul Deur, a principal at New York-based Eden Technologies, a Symantec Platinum partner.

"Their broad portfolio is a patchwork of dispersed products that tend to address discrete elements," Deur said in a recent interview. "If they can go in and make all the pieces work together with integration points that make sense to deliver, that is great. But if it doesn't work, they could determine the company is better off as separate entities."

Brown had served in an interim role for six months following the firing of former CEO Steve Bennett. Bennett had conducted a complete overhaul of the company's sales force, which included downsizing and a more specific product focus for the inside sales teams, but the board cited his sluggish progress as the reason for his termination. The company also shed a number of senior executives during the overhaul.

Partners told CRN that they hope Brown focuses on deepening Symantec's security portfolio, but admitted that storage and IT management also needed attention as competitors increasingly come to market with modern alternatives.