Symantec Ousts CEO Enrique Salem in Favor of Chairman
Symantec Corp. (SYMC), the world’s largest maker of computer-security software, ousted Chief Executive Officer Enrique Salem and passed the reins to Chairman Steve Bennett, saying the company wasn’t performing well enough.
Bennett, former CEO of Intuit Inc. (INTU), also will take the role of president while remaining chairman, Mountain View, California-based Symantec said today in a statement. The move wasn’t triggered by a specific event or any impropriety, said Dan Schulman, the company’s new lead director. The shares jumped 14 percent, the biggest one-day gain in more than a decade.
“Bennett is known for driving operational progress and focused product delivery,” said Brian Freed, an analyst at Wunderlich Securities Inc. in Memphis, Tennessee, who has a buy recommendation on the stock. “The combination of consistent execution and operational discipline is exactly the order Symantec needed.”
Symantec shares had declined 16 percent this year amid slowing sales and shrinking profit. The company, best-known for its antivirus programs, also has been struggling to expand in the storage market, which is led by International Business Machines Corp. (IBM) and EMC Corp. (EMC) Symantec’s push into data storage through the $10.2 billion purchase of Veritas Software Corp. in 2005 was increasingly viewed as a mistake.
“My view is that Symantec’s assets are strong and yet the company is underperforming against the opportunity,” Bennett, 58, said in the statement. “I’m looking forward to working with the team to build upon the significant assets in place to help Symantec accelerate value creation for all of its stakeholders.”
Symantec shares climbed to $14.96 at the close in New York, the biggest increase since July 2001.
“For the next 90 to 120 days, the stock performance will be a function of hope, which is something you didn’t have when Enrique was there,” Freed said.
The company delivered its quarterly results and forecast this morning, moving up the release from this afternoon. Profit excluding some costs will be 35 cents to 39 cents in the fiscal second quarter, Symantec said. Analysts had estimated 40 cents on average, according to data compiled by Bloomberg. Sales will be $1.64 billion to $1.67 billion in the period, which ends Sept. 28, Symantec said. Analysts had predicted $1.69 billion.
First-quarter net income attributable to Symantec shareholders fell about 10 percent to $172 million, or 24 cents a share, from $191 million, or 25 cents, a year earlier. Revenue climbed 1 percent to $1.67 billion in the period, which ended June 29.
Salem, 46, worked at Symantec for 19 years, the last three as CEO. Bennett, meanwhile, joined the board in 2011 following a career at Intuit, General Electric Co. and other companies. He served as Intuit CEO from 2000 to 2007, using a customer-driven approach to expand sales to $2.7 billion from less than $1 billion, Symantec said.
Symantec and rival McAfee, now a part of Intel Corp., have struggled with slow growth in the antivirus market, said Steve Ashley, an analyst with Robert W. Baird & Co. in Milwaukee, Wisconsin. A rise in hacking attacks has benefited smaller companies that focus on specific niches, such as stopping espionage, trade-secret theft and other sophisticated crimes against businesses, Ashley said.
The company also has tried to shift into security for mobile devices -- a strategy Bennett said he would continue. Bennett said he expects to remain CEO until he’s comfortable with the state of the company.
“I told my wife, ‘This might be a five-year deal. It might be a three-year deal,’” he said on a conference call.
Bennett also will concentrate on returning more cash to shareholders, he said. The company ended last quarter with cash and short-term investments of $4.1 billion.
As CEO, Salem had fielding questions on earnings calls about whether he planned to split up the security and storage businesses. Salem said in the past that the company had considered a restructuring and decided against it.
“Enrique was a very talented sales guy, but he would be heading in one direction and all of the sudden veer in another direction,” Freed said. “That is what drove people’s frustration with the company and drove shares to their low valuation. Symantec is too big of a ship to turn on a dime.”
Bennett said today that he would seek new ways to improve Symantec. He plans to spend up to 120 of his first days as CEO on a tour to meet with investors, customers, partners and employees.
“I don’t feel at all constrained by the board,” Bennett said. “I took this job because I believe our assets are better than our performance, and I need to find what’s getting in the way.”