Symantec Split To Cost Up To $220M, Layoffs Ahead

Symantec executives said they expect layoffs and departures to add up to roughly 10 percent of the workforce as the company splits into two separate publicly traded companies.

The split will cost the company $220 million in separation costs, including restructuring expenses, executives said in the company's second-quarter call with financial analysts. The layoffs will enable Symantec to become a "leaner and more efficient organization," said Thomas Seifert, executive vice president and CFO of Symantec.

"Our philosophy is to manage each business separately, minimize disruption to our businesses, partners, customers and employees and execute a well-managed separation," Seifert told financial analysts on Wednesday.

Seifert said some of the savings from the layoffs would be invested in building out the company's priority areas of mobile, services, data loss prevention, advanced threat protection, backup and backup appliances. The separation is expected to be completed by the end of 2015.

[Related: Symantec Channel Chief To Partners: 'Stay The Course']

On Wednesday, the Mountain View, Calif.-based company posted fiscal 2015 second-quarter net income that rose to $244 million, or 35 cents per share, in its second quarter, from $241 million, or 34 cents per share, a year earlier. Revenue fell 1.2 percent to $1.61 billion, slightly missing the average analyst expectations of $1.62 billion.

Some of the costs associated with the separation includes splitting up the new license and renewal sales teams. The company created a contract-separation project to divide up contracts associated with both information management and security product lines. Symantec also is delaying the creation of two parallel organizational structures until late in the process, Seifert said.

Since it announced its historic decision to break up into separate information management and security businesses, Symantec has been adding new product offerings. Symantec CEO Michael Brown said the company is building connections among its products to build out an intelligence platform.

"It's about integrating [advanced threat protection] and [data loss prevention] capability across more of these products at the various control points," Brown said.

In addition to its new threat-intelligence service, Symantec is developing an Endpoint Security Advanced Threat Protection appliance as an add-on for its Endpoint Protection customers.

The company will introduce its Advanced Threat Protection Defense Gateway early next year. It includes cloud-based sandboxing, similar to services and appliances from rival Intel Security (formerly McAfee), and networking security vendors Palo Alto Networks, FireEye, Fortinet, Check Point and pure play vendor Lastline.

NEXT: Integrated Products Will Rely On Skilled Symantec Partners

The integration of the product line into a more complete solution is promising, said David Sockol, president and CEO of security consulting firm Emagined Security, a Symantec partner. Sockol told CRN that the channel needs to respond by being skilled enough to deliver and integrate the products into the organization's operational processes. Symantec partners face challenges ahead, Sockol said.

"As they start integrating products together and the organization makes a commitment to a specific product and product set, we are going to see a greater need for experienced security professionals that can integrate existing product bases into the Symantec technology," Sockol said. "Too many products today are being purchased and becoming shelfware with the belief that if you buy it from the expert, they can install, configure and maintain it for you. But unless the company knows the overall costs when they are going into that procurement cycle, they may not understand the behind-the-scenes requirements."

Symantec said its second-quarter license revenue grew 25 percent year-over-year driven by sales of its NetBackup appliances. Renewals also showed gains, posting a 6 percent year-over-year increase, buoyed by its Storage Foundation and Enterprise Backup product lines.

Enterprise Security revenue decreased 1 percent year-over-year to $511 million as growth in its Endpoint Protection and DLP products were offset by weakness in Endpoint Management, the company said.

Despite the decline, the company said it is seeing increased adoption of its data-loss-prevention software, which is up 18 percent year-over-year. Symantec released version 12.5 of its data-loss-prevention platform in June. User authentication has also risen.

Symantec's information management business grew revenue by 3 percent year-over-year to $621 million. Growth in Enterprise Backup was offset by weakness in information availability, the company said.

Interest in the Symantec Disaster Recovery Orchestrator, which enables businesses to automate and manage disaster recovery of Microsoft Windows-based applications residing on either physical or virtual machines to the Microsoft Azure cloud, is also rising. The company plans on adding support for Amazon Web Services next year.

PUBLISHED NOV. 6, 2014