FireEye's DeWalt: Symantec, HP Almost 'Choked' On Their Acquisition Models
The buying sprees of large technology vendors caused them to balloon and now many are set to pop.
That's the view of FireEye CEO Dave DeWalt who spoke with CRN about the current landscape among large vendors at FireEye's Mandiant MIRCon incident response conference in Washington D.C.
"Large companies emerged ... where they eventually just almost choked on their acquisition model," DeWalt said. "They just ended up acquiring, acquiring, acquiring, acquiring and eventually the balloon got filled and it was hard to keep filling it and growing."
Symantec is reportedly in the late stages of shedding its storage business to focus on its enterprise security products and consumer antivirus. The company is valued at $16 billion. Hewlett-Packard revealed plans Monday to split into a $56 billion PC and Printing business and a $56 billion enterprise computing, software and services business. That came just days after Lenovo officially closed on its $2.1 billion purchase of the x86 hardware business from Lenovo. And Michael Dell last year took his company private in a $24.9 billion leveraged buyout.
"When they reach the point of no growth or very deminimis growth, they have to think about another shareholder methodology to use for valuation control," DeWalt said. "Ultimately it looks to be the markets receiving those very well that divestitures are a better model for value growth than it was to keep growing the way they were."
A Symantec spokesperson said the company would not comment on rumors or speculation. HP also declined comment. The majority of HP's acquisitions were not made during Meg Whitman's tenure as chief executive at HP, which began in 2011.
DeWalt served as president and CEO of McAfee and departed from the company in 2011, a year after Intel acquired bought it for $7.6 billion.
DeWalt oversaw at least 10 acquisitions during his tenure as McAfee CEO. Those deals included a $350 million deal for data encryption vendor SafeBoot and a $500 million deal for network security vendor Secure Computing. DeWalt was also executive vice president and president of customer operations for EMC, which is also rumored to be exploring a breakoff of its RSA Security business.
McAfee was successful because it focused on one market, DeWalt said. Today's security market is an $80 billion business annually with some companies waking up to the fact that they need to capture a greater portion of it.
"We never did storage, we never did anything else. We faced one target, just like I am with FireEye," DeWalt said. "I think others are seeing that security is a big market and they got to get focused and, ultimately, you will probably see more [spinoffs and breakups]."
DeWalt also called the process of eventually growing too large and divesting parts of the business a part of a "natural continuum" of an acquisition growth strategy. FireEye is also growing through acquisition. The company bought Mandiant in a $1 billion deal last December, adding the Mandiant incident response services and endpoint software popular with digital forensics investigators.
DeWalt is currently in the middle of expanding Mandiant's global reach. Its operations were largely in the U.S. DeWalt this week announced a deal with Singapore Telecommunications, one of Singapore's largest telecommunications providers. The deal includes the opening of security operations centers in Singapore and Australia. SingTel will sell FireEye gear and provide managed defense services, including incident response, in the region.
DeWalt said the company built a security operations center in Dublin and is hiring incident responders globally. It maintains a research and development arm in India. Products are being internationalized into different languages as well, he said.
"Internationalization is clearly under way," DeWalt said. "We're in a couple of innings of the whole game, but generally speaking we've made a lot of progress."
PUBLISHED OCT. 8, 2014