Symantec ditches its CEO shares suffer

Antivirus and security software heavyweight Symantec certainly caught the market off-guard yesterday (20^th March).  The company’s shares are feeling the heat today – down around 13% at time of writing.

The US-based company announced the termination of Steve Bennett as President and CEO.

At the same time, Symantec reiterated its fourth quarter revenue and profit guidance: it expects revenue of between $1.62bn and $1.66bn (versus $1.75bn the previous year).

Still, the move to fire Mr Bennett has created something of a stir given that he was just 20 months into the job of trying to restore the company to growth.

Competition is fierce

Prevalent cyber-attacks and security breaches and the resulting sustained emphasis on the need for security means that the market is seen as growing.

So it’s no surprise that competition is fierce among both existing players and relatively new entrants as they grapple to gain a larger share of the growing security market. Following underperformance, and in a bid to reposition competitively, Symantec embarked on a transformation plan, which included developing new competitive products and cutting costs.

But, over the last few quarters, declining sales and a plummeting share price (down some 32% from highs reached last summer) have plagued the company.

In light of Symantec’s recent performance, it’s perhaps fair to say that, despite turnaround efforts, the journey towards renewed growth seemed a tad protracted under Mr Bennett’s helm.

That said, given that the Norton antivirus maker sports a net cash position of around $1.8bn (as at December last year), it does have some financial flexibility to embark on further investments as it continues pursuing a turn around.

But shareholders’ patience might be running out…

According to the company’s interim CEO, Michael Brown, “the need for protecting and managing your information has never been stronger, and we must act aggressively to capture a growing share of this market”.

Indeed, that’s true but it was also just as true some two years ago.

The sell-off on the back this latest news might arguably be a tad dramatic but – until such a time as the company is seen by the market as executing its turnaround effectively (near-term’s doubtful) – the widespread downbeat sentiment is unlikely to improve significantly.