New CEO: Symantec + Blue Coat 'Addresses Over 50 Percent Of Enterprise Security Budgets'

Four days after becoming the new head of Symantec, CEO Greg Clark said the company's acquisition of Blue Coat positions it as the "most strategic security player," able to address a sizable portion of the enterprise security market.

"Our combined product portfolio separates us as the most strategic security player in the industry with a portfolio of solutions that address over 50 percent of enterprise security budgets. … We are the only security company that has the scale and vision to be considered by the CIO as one of their most strategic technology partners," said Clark, who served as Blue Coat's CEO until Aug. 1, when Symantec's acquisition of Blue Coat closed. Clark's comments came Thursday as the company reported that its fiscal first quarter 2017 revenue took a slight hit, but that its earnings exceeded analyst expectations.

Clark said that the Symantec and Blue Coat product lines had relatively little overlap, giving the combined company a "meaningful" cross-sale opportunity and "tailwinds" for increased sales in fiscal 2018.

[Related: Symantec Closes Acquisition Of Blue Coat, Looks To Begin Product Integration Strategy]

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Clark identified three primary ways in which the new Symantec can address customers' security challenges.

Symantec CEO Greg Clark, who until the acquisition of Blue Coat was that company's CEO, said during Thursday's fiscal first quarter financial analyst conference call that Symantec's acquisition of Blue Coat gives it strong leverage in the security industry.

The first is securing enterprises, governments and consumers from advanced attacks, particularly as they adopt the cloud.

"Together, Symantec and Blue Coat have the broadest and deepest set of threat intelligence data in the industry combined with the fastest threat propagation time," Clark said. "Symantec for years has been focused on identifying malicious content and Blue Coat has been categorizing, mapping and fingerprinting the internet with a purview into the darkest parts of the web and malware trade craft. Together, Symantec with Blue Coat will have the most powerful combination of threat intelligence as well as an open platform in which to deliver enhanced cyberdefense anchored in threat intelligence."

To address this area, Symantec will lead with integrated solutions, but will also continue to deliver best-of-breed security, Clark said. The company is also optimistic about its progress with its managed security service aimed at customers who have difficulty hiring and retaining experienced security personnel, he said.

"We are also committed to empowering our managed security service partners and committed to empowering this important sector as service providers and [system integrators] are important players in the migration to the cloud," he said.

The second major opportunity is protecting mobile workforces as employees increasingly work outside the network firewall and access cloud services and corporate data from various devices, Clark said.

The security industry is seeing a boom in internet-connected devices like medical or industrial equipment and IoT that are not protected from modern security threats, he said.

Symantec is responding by integrating the traditional Symantec endpoint technology with cloud-focused security technology from Blue Coat, Clark said. For example, the Symantec Endpoint Protection solution will direct outbound traffic through Blue Coat's security cloud for inspection, which will then automatically quarantine the user, remediate the problem, and provide forensics data if there an issue.

"No other security provider in the market today has our unique capability of deep functionality on the endpoint, combined with visibility and time to remediation capabilities inherent in our cloud security platform," he said. "We believe the work we are doing is important enough to redefine cyberdefense."

The third major opportunity is helping customers securely embrace the cloud, Clark said. This requires a security platform that provides discovery, categorization and policies for cloud applications, the ability to monitor and enforce how data can be moved and accessed as it moves to the cloud, and the ability to encrypt or tokenize critical information.

Symantec and Blue Coat together can provide this capability, Clark said.

"To assemble the same level of protection through multiple vendors will result in costly, loosely integrated security architecture, and a dependence on retaining the people that built it," Clark said. "Our customers are telling us that these sustainment costs and risks are a substantial problem."

Thomas Seifert, Symantec chief financial officer, said in his prepared statement that Symantec's enterprise security revenue slid 1 percent compared to last year.

This included a 5 percent fall in threat protection revenue balanced by a 4 percent increase in information protection revenue, a 9 percent increase in cybersecurity services and other services, and a 1 percent increase in website security revenue.

Symantec's Norton consumer security revenue fell by nearly 8 percent over last year, Seifert said. However, he said that the underlying fundamentals of that business are improving as the subscription and online application part of the business grows.

During the question-and-answer portion of the conference call, when Clark was asked which issues Symantec could handle with the acquisition of Blue Coat that couldn't be handled on its own or via a technology partnership, he listed several.

Those issues centered around the cost of building a complete cyberdefense capability that included anti-virus, endpoint protection, governance issues, remediation technology,and more.

Customers really want these integrated into a solution that also includes the ability to protect data in the cloud, he said. "Add this up, you create a very expensive solution," he said.

When asked about how Symantec customers are now purchasing cloud security, Clark said the combined company now allows it to be integrated into a customer infrastructure quickly while offering a base on which future sales can happen. "As we land in our customer with our cloud security stack, we see demand grow for other modules," he said.

Symantec is the only company that can do the kind of integration of all the key security technologies customers will require going forward, including next-generation endpoint protection, forensics, and behavioral analysis, Clark said.

"It exists," he said. "If I were to give us a ding, I'd say we don't talk about it enough. … We have a good platform there. We don't market it enough. We will change that."

The company also reported that the close of its acquisition of Blue Coat Systems on Aug. 1 actually happened quicker than expected, giving the combined company an opportunity to move forward on integration of their solutions faster than originally planned.

For the fiscal first quarter of 2017, which ended July 1, Symantec reported revenue of $884 million, which was down about 3 percent compared with the $912 million the company reported for the fiscal first quarter of 2016.

Symantec's earnings, however, took a positive turn during the quarter.

On a GAAP basis, Symantec reported income of $135 million, up 15 percent over the fiscal first quarter of 2016. GAAP earnings per share reached 22 cents, up 29 percent from last year's 17 cents per share.

On a non-GAAP basis, Symantec reported fiscal first-quarter earnings of $177 million, which was down 3 percent over last year. However, earnings per share rose 12 percent to 29 cents, the company reported.