Symantec Slashing Products, Investing In Key Storage, Security Lines

Symantec reported increasing profits but a decline in revenue in its fourth-quarter earnings call, telling Wall Street that its numbers show the company is "healthy." Meanwhile, its board of directors is searching for a third CEO in four years in an effort to jump-start growth.

The Mountain View, Calif.-based security and data management vendor said revenue fell year-over-year, reporting $1.6 billion in fourth-quarter revenue, a 7 percent decline from the prior-year period. The company's net income came in at $217 million, resulting in earnings of 32 cents per share, which falls in line with the guidance Symantec set after it abruptly fired CEO Steve Bennett.

Interim CEO Michael Brown told investors to expect modest revenue growth returning during the second half of the fiscal year as a result of improved direct and renewal sales activity, the company's revamped channel program and new product launches.

[Related: Symantec Executives Acknowledge Sluggishness, Promise Product Integration ]

"We have deployed a new planning process that enabled us to align priorities and quotas and other sales resources earlier, which allows our teams to get off to a fast start in fiscal 15,’ Brown said.

Brown also said that the company is conducting an active search for a chief products officer as it invests in backup, storage management and security. A team also is systematically reviewing every product line and investing in those with the most promise for revenue gains, he said.

"We are methodically evaluating every product line to balance our profitability targets against our growth objectives," Brown said. "Some of our businesses are ideal for improving operating margin, while others are best positioned for growth.’

In backup and storage management, Brown cited new releases of Backup Exec and Enterprise Vault, and a cloud-based disaster recovery product integrated with Microsoft Azure cloud. In security, Brown cited integration with network security appliance makers Check Point Technologies, Palo Alto Network and Sourcefire, which was recently acquired by Cisco Systems, to bolster advanced threat detection and incident response.

Symantec also recently unveiled a communication linkage between its endpoint, email and gateway products it calls Synapse to bridge threat information for more efficient response and protection, Brown said.

NEXT: Partner Optimism About Symantec Turnaround Mixed

Symantec channel executives and product managers hosted key partners at an executive summit held concurrently with its 2014 Vision user conference this week, expressing optimism about the company’s renewed focus on product development.

The company unveiled a completely redesigned channel program this week. The new program is designed to reward partners that get validated as an "expert" in about a dozen technology areas, but partners said some details about the program remain unclear. They also said they don’t know whether executives can truly make it run efficiently until it is officially launched in October.

Alex Moss, managing partner of Chicago-based security consultancy Conventus, said his firm will stick with Symantec in the near term, but the uncertainty is causing him and other partners to investigate partnering with Symantec competitors, including those that are coming to market with emerging security technologies.

"The changes and disruption have gone on for way too long,’ Moss said. ’There has been a lot of talk about integrated products, but even if they come to market there’s an interim period where partners need to understand it, communicate it properly [to customers] and finally deploy it."

During his keynote to customers and partners at the Vision conference, Brown said the company is currently investing heavily in product development with strategic priorities around unified information security and unified information management.

The security vendor is launching an advanced threat detection managed service and developing an advanced threat detection product that merges its endpoint, email and gateway capabilities. Executives also hinted at a new platform being developed that combines its cloud security components with its endpoint security and Altiris IT management platform.

Some Symantec partners said they are still optimistic, citing interest in some of Symantec's key products despite revenue declines in its fiscal 2014 in nearly every segment of its business. Storage and disaster recovery is still a strong area, partners said.

Michael Spindler, a practice director of data protection and storage at Minneapolis-based managed services provider Datalink, said his firm's backup and appliance business is growing significantly. Spindler said the company partners with Symantec as part of its strategy to provide customers with an enterprise-level reliability and protection.

"We have both worked together to step up our game,’ Spindler said. "Every dollar that you drive in the compliance hardware business drives 2.5 times more revenue."

The company’s information security segment was the only one to see revenue gains, increasing a modest 1 percent year-over-year, driven by its data loss prevention and authentication software. Brown said mail, web and data center security business was weak.

The user productivity and protection segment, which comprises endpoint security and management, encryption and mobility, declined 3 percent year-over-year to $2.8 billion. The Information Management segment, consisting of backup and recovery, data archiving and e-discovery, declined 4 percent to $2.5 billion.

NetBackup business grew, Brown said, but was offset by weaknesses in Backup Exec and information availability offerings.

PUBLISHED MAY 9, 2014