How does the leading computer-security company stay one step ahead of an explosion of Internet viruses? If you're Symantec Corp. (SYMC) Chief Executive John W. Thompson, you buy companies to create one of the broadest portfolios of hacker-battling products on the planet.
Although Symantec has long used acquisitions to boost its growth, Thompson has upped the buyout pace even more. Since taking the helm of the Cupertino (Calif.) company five years ago, he has spent more than $1.7 billion acquiring 13 companies specializing in such products as personal firewalls, intrusion detection, and early warning systems. Symantec's 2002 purchase of SecurityFocus, a pioneer of early warning antivirus services, instantly made it a leader in that fast-growing market. Thompson says Symantec is adding products rapidly because it has to. "About every 15 to 18 months, there's a new form of attack that makes old technologies less effective," he says.
All that deal-making has made Symantec the company to beat in the battle to protect everything from corporate Intranets to consumers' e-mail inboxes. Ranked No. 61 in this year's Info Tech 100, Symantec's sales in the fiscal year ended Mar. 31 rose 33%, to $1.87 billion, and profits jumped 49%, to $371 million. On Apr. 28, the company raised its fiscal 2005 sales forecast to $2.33 billion, a 25% increase over the previous year. Execs also said profits would top $480 million. "Symantec is becoming the dominant security provider," says analyst Sarah Friar of Goldman, Sachs & Co. (GS). Financial success, however, is attracting increasingly aggressive competition. Microsoft Corp. (MSFT) is considering adding its own antivirus software to Windows. That could gnaw away at Symantec's core desktop antivirus software business -- which accounts for 74% of revenue. At the same time, VeriSign Inc. (VRSN) and others are moving into the business of managing computer security for corporations, one of Symantec's growth markets.
Thompson's response? More acquisitions. On May 19, he unveiled a $370 million deal for the No. 1 antispam company, Brightmail Inc. That will help Symantec continue to diversify beyond the antivirus market and strengthen its corporate business. With 1,800 customers, Brightmail will ease Symantec into the door with corporate clients -- providing added opportunity to sell them more security products.
Thompson's not done making acquisitions yet. Next up? He wants to boost consulting, although he won't say which companies he might woo for this. As corporations look for new ways to protect themselves from the dark side of the Web, they can be sure that Thompson is shopping just as hard as they are.
By Brian Grow in Atlanta