Symantec to split into security and storage software companies
(Reuters) - Norton antivirus software maker Symantec Corp SYMC.O will split into two publicly traded companies, one focused on security and the other storage and backup, potentially making itself more attractive to suitors.
The move by Symantec, which has fired two CEOs since 2012 as its stock and financial performance lagged many other software makers, follows a trend of companies splitting in an effort to boost their share prices. The deal also reverses its long troubled $13.5 billion acquisition a decade ago of storage software maker Veritas.
Slowing PC sales have hurt its security sales, while sluggish demand for its storage and data management software has diminished the value of Veritas, which was seen as a "cash cow" when it was purchased.
"Symantec has been a headache name for tech investors over the last decade," said FBR Capital Markets analyst Daniel Ives. "It's nice to see the board make a decision that strategically makes sense for the company and its investors."
The break-up, which was announced on Thursday, comes during a banner year for spinoffs. More than 60 are expected to be completed this year, the most since 2000, according to Spin-Off Research.
Among the recently announced spinoffs, Hewlett-Packard Co HPQ.N is separating its PC and printer unit from its corporate hardware and services operations.(Full Story) Online auction company eBay Inc EBAY.O is spinning off its electronics payment service PayPal.
A number of potential buyers, including Cisco Systems Inc CSCO.O and NetApp Inc NTAP.O, are likely to show interest in the two surviving Symantec businesses, Piper Jaffray analyst Andrew Nowinski said in a note.
"Post split, you have two companies, one focused more on cash flow and one focused more on revenue. So, put together, can it help revenue? I think it can, certainly, but you have to execute," said Tim Ghriskey, chief investment officer with Solar Asset Management.
Symantec's revenue fell 3 percent to $6.7 billion in its most-recent fiscal year as its storage business struggled. That unit's operating income dropped 19 percent to $574 million as revenue fell 4 percent to $2.5 billion, according to the company's 10-K annual report.
Historical figures for the new security division were not immediately available, though the company said it had revenue of $4.2 billion last year.
Michael Brown will continue as Symantec's CEO, while Thomas Seifert will be its chief financial officer. John Gannon will be general manager of the information management business prior to the spinoff, which is expected to be completed by the end of 2015, Symantec said.
Shares in the new business will be distributed tax-free to Symantec shareholders at a ratio that has yet to be determined.
J.P. Morgan acted as Symantec's adviser.
Symantec shares closed down 2.3 percent at $23.44 on the Nasdaq on Thursday. They were quoted at $23.50 in extended trade.
(Additional reporting by Jim Finkle in Boston and Lewis Krauskopf in New York; Editing by Maju Samuel, Simon Jennings and Cynthia Osterman)