Symantec is a company that really should be doing better than it is, due to demands for enhanced security in a cloud and mobile world, but it has not been able to consistently capitalise on its strengths. This was underlined again when it revealed poor Q1 2013 results and announced that CEO Enrique Salem was stepping down with immediate effect, to be replaced by current chairman and business turnaround Steve Bennett. "My view is that Symantec's assets are strong, and yet the company is underperforming against the opportunity," Bennett said.
Shares rose c14% following the news of the top seat change despite a Q1 in which yoy revenue rose just 1% (to $1.69bn) but net income dropped c10% (to $172m). Operating margins also headed downwards, from 18.3% to 16.1%. The Clearwell and LiveOffice acquisitions contributed $24m of revenue during the quarter. The poor Q1 follows a dull Q4 (see here).
The Storage and Server division (35% of the business) is an ongoing weak area and revenue fell 2% yoy. Consumer (31% of the business) fell back 1%. Services (4% of the business) dropped back 2%. The Security and Compliance segment increased 7%. This is Symantec’s strongest and most consistently performing area but even though it contributes nearly a third to the total revenue figure (30% ), its growth is not enough to offset declines elsewhere. Symantec saw growth in endpoint protection, consumer security, authentication services, data loss prevention, and backup appliances.
In terms of geography, the company reflected what is becoming a common theme, with EMEA revenue declining (-8%), AsiaPac growing solidly (+9%), and the America’s increasing modestly (+3%).
Bennett has hard work ahead of him. He has some good foundations in place but the business could do with some reshaping.