10 Things To Watch For From Symantec's Interim CEO Richard Hill
Here's a deep dive into why Symantec CEO Greg Clark left abruptly and how interim CEO Richard Hill plans to address challenges around channel performance, closing deals, and the company's enterprise security pipeline.
Symantec startled the industry with the news Thursday that Greg Clark was immediately resigning as president, CEO and board member after three years in the top job. Following the announcement, the company's stock plummeted $3.30, or 14.88 percent, to $18.87, which is the lowest Symantec's stock has traded since early January.
The cybersecurity giant also announced that former Novellus Systems Chairman and CEO Richard Hill (pictured) would take over as Symantec's president and CEO on an interim basis. The company said it plans to begin the search process to find a permanent CEO.
"I accepted this role because Greg [Clark] and the management team convinced me we had solid industry-leading products with more on the way," Clark said. "I have verified that is true. We have issues and have determined that they are fixable."
Here's a deeper look at why Clark resigned as Symantec CEO, what makes Hill a good fit to be his interim replacement, and what Hill believes are the strengths and weaknesses in the company's business today.
10. Clark's Final Year At Symantec Was Turbulent
Clark's last year with Symantec was a rocky one, punctuated by an internal accounting probe, activist investor unrest, staff cuts, and a 32 percent drop in the company's stock price.
The troubles began in May 2018, when Symantec announced an internal probe into concerns raised by a former employee. The investigation found certain behavior inconsistent with the company's code of conduct, and resulted in the deferral of $12 million of revenue that had been recognized in the quarter ended March 2018.
In August 2018, Symantec announced plans to cut its 11,000-person staff by up to 8 percent as part of a $50 million restructuring effort.
Also in August, activity investor Starboard Value said in a regulatory filing that it believed shares of Symantec were undervalued at the time of purchase, and that it hoped to change the makeup of the Symantec board to unlock more value. The following month, Symantec and Starboard reached an agreement to name three new independent members to the company's board of directors.
9. Financial Struggles, Family Health Issues Took Toll On Clark
Clark approached Hill in late April and indicated that he had personal issues he needed to address and wanted to spend more time with his ill and aging father, according to Hill.
Being a CEO is extremely stressful and difficult, Hill said, and the pressure is quite high to deliver strong financial results as well as top-line growth for shareholders. And somebody with the pride of Clark wouldn't like to see Symantec's result in the most recent quarter, Hill said, which included a 1.7 percent drop in sales punctuated by a 24 percent billings decline in the struggling enterprise security business.
"The next phase of executing this strategy requires both a clear, laser operational focus as well as the ability to be able to extend this strategy beyond where it is today," Hill said. "And so mutually, both Greg and the board agreed that now is the right time [for Clark to leave]."
8. Hill First Reached Out To Symantec After Launch Of Internal Probe
Hill reached out to a Symantec board member in May 2018 following the launch of the Audit Committee investigation to offer his assistance. Two months later, activist investor Starboard Value proposed nominating Hill to Symantec's board of directors, and he ultimately joined the company's board in January.
Hill said he started working with Clark and Symantec's board in October 2018 as an adviser, and by early April, Hill was being introduced to Symantec's field organization. Once Clark communicated internally his plan to promptly resign as president and CEO, Hill said the board attempted to see if one of its members could step into the top role while a thorough search was conducted to find a permanent CEO.
Symantec's board selected Hill due in part to his previous experience as interim CEO at Marvell Technology. Hill said his appointment as interim CEO was formally approved Tuesday and publicly announced Thursday.
7. Hill Has A Track Record Of Finding, Grooming New CEOs
Hill spent nearly two decades as CEO of semiconductor manufacturer Novellus Systems prior to it being acquired by Lam Research for $3.3 billion, and currently sits on the board of several companies, including Marvell and IT distributor Arrow Electronics. He plans to take an active role at Symantec from day one, and said he isn't afraid to "break glass."
"Rest assured, I'm confident and prepared to operate this company without missing a heartbeat," Hill said.
Hill, age 67, said he's very proud of developing current Lam Research CEO Tim Archer into one of the best leaders in the semiconductor capital equipment industry, as well as finding and installing Matt Murphy as a first-time CEO at Marvell Technology.
"I not only can develop horses, but I can pick them as well," Hill said. "So stay tuned."
6. Hill Has Set Ambitious Sales, Productivity Goals
Hill said his top priority at Symantec is to increase revenue by as much as 5 percent, which he intends to accomplish through demand generation activities that help fill the pipeline. Specifically, Hill said he plans to improve the rate at which Symantec closes business through a combination of improved processes and communication.
In addition, Hill said he wants to increase Symantec's overall productivity by 20 percent on a year-over-year basis. In pursuit of that goal, Hill said Symantec has analyzed every line on its income statement, balance sheet and cash flow statements.
Hill said every member of his staff will own not only the targeted result, but also the task of implementing programs to achieve that goal.
5. Hill Plans To Address Struggles Around Forecasting, Closing Business
Hill said Symantec needs a more routine week-to-week process during the quarter that involves more interaction between the product groups and the sales organization. Additional cross-functional communication will help Symantec more precisely identify opportunities and focus the resources needed to close business, according to Hill.
Symantec can't rely only on its 550 official sales reps to close business, Hill said. And up until now, Hill said the use of Symantec's broader support organization to close business has been disconnected and a little too ad-hoc rather than systematic. Symantec has put in a process to change that, Hill said.
Symantec has specifically struggled on the front end of new business forecasting, according to Enterprise Products Executive Vice President and Genearl Manager Art Gilliland. Gilliland said the company intends to focus on improving process, improving inspection, and using more analytics to drive the forecasting process.
4. Hill Will Capitalize On Growing Interest In Symantec's DLP Offering
The combination of Symantec's DLP and CASB product bundle delivers unparalleled data loss prevention in the cloud, according to Hill. Specifically, Hill said Symantec's DLP (data loss prevention) product is growing at twice the rate of the market as companies increasingly recognize the reputational damage they could suffer if their customers or employees' data is compromised.
Hill anticipates that Symantec's DLP offering will be the company's most rapid growth driver. Although the company's DLP tool is growing off a small base, Hill said it's positioned to become very substantive at its present growth trajectory.
Symantec's DLP product is at an inflection point, Hill said, and adoption of the product of is expected to continue growing handsomely over the next few quarters. And given the increased attention on cybercriminals trying to get at people's data, Hill said the company's DLP business has a promising future ahead.
3. Hill Plans To Improve Communication Around Symantec's Email Security Tool
Symantec's email ATP (advanced threat protection) bundle blocks 98 percent of the threats delivered through email and closes them faster than any company in the world, Hill said. Conversely, Hill said the industry-leading email platform supplier is only 35 percent accurate at blocking threats.
But Symantec has poorly communicated the power of its email ATP bundle to the marketplace, Hill said, especially given that email is still the major delivery source of cyberthreats throughout the world.
Symantec needs to make sure that it's working closely with the channel to emphasize the security benefits of supplementing the industry-standard business email platform with Symantec's protection bundle, Hill said.
2. Hill Hopes To Slow The Bleeding From The Blue Coat Proxy Hardware Business
The company's Blue Coat hardware proxy bundle business has fallen off more quickly than Symantec anticipated, resulting in a smaller-than-expected refresh cycle, Hill said. Blue Coat Systems was acquired in August 2016 by Symantec for $4.65 billion, but the move to the cloud resulted in the company being behind with its product offering.
The company's proxy offering is back with superior performance and is gaining share from competitors, Hill said, but is growing from a much smaller base. As a result of product improvements to the core Blue Coat business, Hill said Symantec is now in a much better position to retain its key customers in the cloud.
Nonetheless, Hill said the biggest contributor to Symantec's sales slump has been the faster-than-expected drop in the company's Blue Coat hardware business. Symantec still anticipates further declines going forward, Hill said, but not at the rate the company saw in the last couple of quarters.
1. Hill Said Symantec Needs To 'Improve' The Performance Of Its Channel
Hill said Symantec needs to expand how quickly it gets products out to address a wider cross-section of business opportunities. The company also wants to lower costs by shifting more expenses to a variable structure in the channel, although Hill didn't elaborate on what that meant.
The loss of lots of small to midsize business was specifically called out by Hill as part of the reason Symantec has a sales hole to fill in its enterprise security segment. Hill said Symantec needs to "rebuild that base core" so that coming up short on a few large opportunities doesn't result in missed projections or lowered forecasts.
"How our channel is working has to be improved," Hill said. "We've got to accelerate what we get across the entire channel. … And I think we have effective plans in place today that are going to take us there."