Symantec’s New CEO Bennett Is Said to Plan 1,000 Job Cuts
Symantec Corp. (SYMC) Chief Executive Officer Steve Bennett plans to cut at least 1,000 jobs as part of his overhaul of the world’s largest antivirus software maker, a person familiar with the plans said.
Even as it eliminates about 5 percent of staff, Symantec plans to hire workers in areas such as research and development, said the person, who asked not to be identified because the details aren’t being made public. The company yesterday had said it will reduce the workforce, without providing a number, and announced a dividend for the first time, along with a $1 billion stock buyback.
Bennett was named CEO in July after the board ousted Enrique Salem amid concerns about the company’s ability to adapt to shifting security needs. Symantec shares have risen 43 percent since Bennett’s appointment on optimism he would cut costs and divest underperforming businesses, said Daniel Ives, an analyst at FBR Capital Markets & Co. in New York.
“Investors want to make sure Symantec gets away from some of the anchors on the ship and focus more on the higher-growth, higher-margin areas,” Ives said in an interview. “Consumer and enterprise security should be the areas of focus. That’s something investors want to hear.”
To become more flexible and more quickly meet customer needs, Symantec will pare its ranks of executives and middle managers, “resulting in a reduction of the workforce,” the company said yesterday in a statement.
Smita Rode, a spokeswoman for Mountain View, California- based Symantec at the Weber Shandwick agency, declined to comment on job cuts. The company had 20,500 employees as of March 2012, according to data compiled by Bloomberg. Symantec shares rose 2.9 percent to $21.46 yesterday.
On a conference call that provided the first glimpse into his new strategy for the company, Bennett discussed Symantec’s plans to return cash to shareholders and restructure business units. He didn’t disclose any acquisitions or divestitures.
One change will be reorganizing the sales division to focus solely on new business, while creating a separate team dedicated to convincing existing customers to renew software subscriptions, Bennett said. Under the current arrangement, many salespeople spend less than half their time selling products, he said.
“Our system is broken,” Bennett said.
Symantec also needs to team up with other companies and will offer more packages of products, Bennett said.
“We’ve kind of been a lone wolf,” he said. “There are a lot of people there I think we can partner with to deliver value to customers.”
As part of a plan to return about 50 percent of free cash flow to investors, Symantec will initiate a quarterly dividend. The payout is expected to begin in the June period and will target a yield of 2.5 percent based on yesterday’s closing price of $20.86, the company said.
The board also authorized a stock buyback of $1 billion, to begin in the fiscal year starting in March. The new repurchase adds to the $283 million left in the current buyback plan, Symantec said in a statement.
Symantec yesterday reported fiscal third-quarter revenue and earnings that topped estimates, helped by strong demand for data-management tools. Profit excluding some items was 45 cents a share, the Mountain View, California-based company said in a statement, exceeding analysts’ 38-cent average projection, according to data compiled by Bloomberg.
Revenue for the period, which ended Dec. 28, rose 4.4 percent to $1.79 billion from the same period a year earlier. Analysts projected sales of $1.74 billion.
On a conference call after markets closed yesterday, the company said fourth-quarter profit will be 37 cents to 38 cents a share, excluding some costs, compared with an estimate of 40 cents. Revenue will be $1.7 billion to $1.74 billion, versus an estimate of $1.73 billion.
Revenue will be unchanged to up 2 percent in the 2014 fiscal year, which begins in March, Symantec said. Analysts predicted 3 percent growth to $7.05 billion, according to data compiled by Bloomberg.
Symantec reaffirmed an earlier forecast that it will reach revenue growth of more than 5 percent and operating margins, excluding some costs, of more than 30 percent, in the next two to three years.
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