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Symantec's Different Drummer

By Jim Kerstetter John Thompson has always been independent enough to do things his own way -- and smart enough to know when to cool it. When he was a young salesperson in buttoned-down IBM in the mid-'70s, in his leisure suits and stylishly big hair, he was a hip anomaly in a sea of conservative blue suits. "I was determined I wasn't going to be a slave to IBM fashion," says Thompson.

Thirty years later, and now CEO of security software company Symantec, Thompson is more Brooks Brothers than Saturday Night Fever. But he's still marching to his own tune. While his competitors have hunkered down, Thompson has been on an acquisition spree. Since he took over as CEO of the Cupertino (Calif.) company in April 1999, Symantec has spent $1.38 billion to acquire 10 companies.

Thompson's goal? Provide everything a corporation needs to protect its computer network, from software that looks out for computer viruses to services that help run increasingly complex corporate security systems.

BUYING BEST-OF-BREED. In doing so, Thompson is trying to go where other security companies have flat-out failed. In the late '90s, rival Network Associates bought a six companies in an effort to build a complete set of security software. But the products never quite worked together, and Network Associates nearly collapsed under the weight of those acquisition costs.

Secure Computing made a similar mistake when it moved away from its specialty -- firewalls that protect networks from intruders -- and tried assembling its own suite of security software. But customers ignored the suites and went about business the way they always have -- buying the best in every category from whomever makes it. "Anybody will tell you, security people will buy things best-of-breed," says Robert Shaw, CEO of ArcSight, a Sunnyvale (Calif.) security startup. "They will not buy the suites."

Thompson has the wherewithal to try to buck the trend. In Symantec's most recent quarter, which ended Sept. 30, revenues were $325 million, up 34% from a year ago and easily double the rest of the security market's growth rate. Net income was $52 million, vs. $12 million a year ago. Analysts at U.S. Bancorp Piper Jaffrey estimate that earnings for Symantec's fiscal 2003, which ends in March, will jump 22%, to $1.3 billion, from the year before.

ANTIVIRUS BANKROLL. Customers may not buy suites of security software, but they're buying plenty of something from Symantec, mainly what Symantec has always done best -- antivirus software to protect corporate networks and consumer PCs.

Thompson is using the antivirus dividend to bankroll his bigger ambition to be a one-stop shop for all corporate security needs. He's adamant that, this time around, customers will buy into the idea, though they haven't before. This time will be different, according to Thompson, because software technology has improved enough to ensure that Symantec's various pieces of software work together. And he can sell all that additional software into what some already consider to be the largest installed base of customers in the security market.

Thompson has always been a guy with an eye on the future. He was born in 1949 in West Palm Beach, Fla. in what he describes as a middle-class black family. His father was a postman and his mother was a teacher. He says his father drilled into him the value of an honest day's work. His mother? She made him understand the importance of a good education.

INESCAPABLE RACISM. From there it was on to Lincoln University in Missouri. On his first day there, an instructor asked Thompson's class, "How many of you are from the South?" Nearly every hand went up, including Thompson's. But when he said he was from West Palm Beach, the instructor laughed, "Southern Florida is not the South."

Maybe so. But it had flavors of the Old South. Thompson can still remember things like segregated bathrooms. "You can never entirely escape racism," he says. While Thompson says he doesn't make it a point to define himself by issues of "ethnicity," nor does he stay silent. Two years ago, when Jesse Jackson called on Silicon Valley's help to solve the "digital divide," Thompson had him over for dinner at his home.

Though he describes himself as a Democrat keenly interested in issues like education, he avoids getting too wrapped up in political issues. "My job and Jesse Jackson's job are different," he says. While Jackson's top priority is looking out for the interests of the black community, Thompson believes his must be driving growth at Symantec.

A SORE THUMB. That single-mindedness probably comes from growing up fast. He became a husband when he was just 19 years old, and a father not long after. Thompson persevered. He transferred to Florida A&M and received a degree in business administration, but he says he was no great student. "I didn't care about As and Bs, I just cared about getting through the class," he says.

Then IBM came calling. A professor convinced him to get into an IBM training program and, by 1971, Thompson was a young IBM salesman in Tampa. His first and biggest customer, as a member of a five-man sales team, was General Telephone. He stuck out like a sore thumb in his polyester suits, an "eight-pound Afro," and mustache. "I didn't believe in white shirts and blue shirts," he says. But he wasn't naïve. When he went for the biggest deal of his young career, a $5 million transaction with GTE, he made sure to don a blue suit. The young rebel was growing up.

Not long after, he got a sensible, IBM-friendly haircut, shaved off the mustache, bought some ties, and John Thompson, the rising IBM executive was born. He moved through several offices, became a regional sales manager in Boston, and even took a year off in 1982 to become a Sloan Fellow at MIT. "It seemed like every 12 months I had a new job," he says.

ITCHY REBEL. In 1993, Louis Gerstner arrived, and Thompson's star kept rising, until he became general manager of IBM Americas, in charge of sales and daily operations. Still, the moves took a toll on his marriage. The father of two (now a grandfather of three) divorced his longtime wife. He remarried another IBM executive in 1998.

By the end of the decade, however, Thompson's internal rebel was starting to itch. He says he realized that Sam Palmisano was being groomed to replace Gerstner. He got to thinking about getting out. Opportunity came knocking from another John Thompson, a headhunter working with Symantec. The antivirus software company, after a decade of growth, was sputtering. Founder and CEO Gordon Eubanks wanted out and was looking to bring in someone with more experience running a large company. Thompson looked like the perfect match.

In the spring of 1999, Thompson met with Symantec's executive team at the company's Silicon Valley headquarters. The two-hour session became a "reverse interview," recalls Greg Myers, Symantec's chief financial officer. Thompson grilled the executives on financial controls and planning. It was clear, says Myers, that Thompson didn't want to land in a financial swamp.

BACKYARD CHEF. It was also clear that Thompson knew exactly what he thought Symantec should be: The biggest supplier of security software for the Internet. "Symantec was devoid of an Internet strategy," says Myers. "I think that was making the board crazy."

Thompson headed West, bought a house in tony Woodside in the hills above Silicon Valley, and got closer to two of his biggest loves: the outdoors and cooking. Just about every weekend, Thompson and his wife take to the wooded hills around San Francisco Bay or dig in for a day of cooking in a wood-fired stove in their backyard. In fact, cooking has a long history in the Thompson family. His grandfather, years ago, was a chef at a swank Palm Beach (Fla.) hotel. And his son is the executive chef at a country club in South Carolina.

In the office, Thompson immediately made bold moves: First, he jettisoned two businesses: So-called developer's tools for writing software and PC software for managing contact lists. Thompson wanted Symantec focused on one thing only, security. Even Eubanks says it was probably a wise move. "John was able to see things in the company that I never could. Maybe things that I was too in love with," says Eubanks.

"BITTER ENEMIES." Thompson also acquired Axent Software, a company whose wares detect virtual intruders, in a $924 million stock deal that remains his biggest to date. It was risky, even in free-spending 2000. By that point, it was clear that Network Associates was unraveling because of its suite strategy. Why would Thompson want to make a similar move?

Competitors still wonder. George Samenuk, chief exec of rival Network Associates, admires Thompson. He even calls him "one of the finest executives I have ever met." And he should know. Samenuk worked with Thompson for more than two decades before succeeding him as IBM's general manager of the Americas. Samenuk, who moved to his new job in 2001, even threw Thompson's going-away party at a Marriott in Greenwich, Conn. "We have a very strong personal friendship, but we're bitter enemies," says Samenuk.

All that said, he takes some quick shots at his old friend's strategy: "He's making the same mistakes Network Associates made before I got here," says Samenuk. "People will not buy the suites."

POTENT VIRUSES. It's a fair point. It's still not clear what kind up pickup Symantec is getting from its acquisitions, which have focused on areas outside its core antivirus software business. Indeed, Symantec's earnings of the last year have been spurred by two computer viruses that hit the Internet last fall, Code Red and Nimda. They proved that hackers are now smart enough to create viruses that damage data while opening an electronic door for intruders. "They were a catalyst for our business," says Thompson.

So was an improved retail channel, tapping into a growing, mainstream concern about computer viruses. Consumer software sales, mostly of antivirus and desktop firewall software, have jumped nearly 90%. "They're trying to take advantage of a strong segment to build a weaker business," by investing the strong antivirus profits into other business lines, says Gene Munster, an analyst at Piper Jaffrey.

Which is not a bad thing. But for Thompson to have a legacy at his company, he'll have to prove that marching to his own tune is as good for Symantec as it has been for his career. Kerstetter covers software from BusinessWeek's San Mateo bureau

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