Nearly two years after Symantec acquired storage software maker Veritas for $13.5 billion, the security giant is still struggling to make its strategy work. Worryingly, its enterprise business has suffered the greatest disruption. And Symantec’s solution to this? Another acquisition.
For the second quarter in a row Symantec has posted, in the words of its CEO John Thompson, “disappointing results”, with the finger of blame pointing firmly in the direction of the Veritas camp. Revenues for its quarter ending 29 December 2006, were $1.32 billion compared to $1.25 billion in the year-ago quarter.
While overall revenues are up, they were pegged back by the poor performance of its data centre management business – largely comprised of Veritas products. Here revenues dropped by 8%, from $924 million in Q306 to $914 million.
The results have reignited concerns over the wisdom of acquiring Veritas. At the time, the acquisition was explained as part of a trend towards information integrity, where customers would look at aspects of storage and security from a single vendor; where information would be securely stored in heterogeneous environments throughout enterprises, constantly available, easily retrieved, and properly backed up.
It was a vision centred on the enterprise market, and though clearly Symantec has its work cut out if it is to make the acquisition pay dividends, it is a market that Thompson intends to hotly pursue. This was further demonstrated by its latest acquisition, that of Altiris, a provider of systems management tools.
Symantec is spending $830 million to obtain Altiris’s tools, which are used to control servers, desktops and mobile devices. This will allow it to address issues surrounding threat prevention, systems back-up and compliance. Symantec claims that the convergence of the two product sets will result in a more comprehensive solution to securely manage the rampant proliferation of devices within the business environment.
Thompson is adamant that his enterprise strategy is right. However, perhaps mindful of the lessons from its Veritas acquisition, he has promised to sharpen its execution. The deal for Altiris is accompanied by plans to strip out $200 million in costs from the business, and reduce headcount by 5%.
But the Altiris deal could also add momentum to Symantec’s future results: It is growing at “two to three times the rate of Symantec’s core business,” says Thompson. If that is maintained, Thompson is likely to face an easier time over his acquisition strategy in future.
