Symantec Announces Layoffs, to Focus on Consumer Business
Amid selling its enterprise security business to Broadcom, Symantec is laying off 7% of its workforce and closing certain facilities as part of a $100 million restructuring program.
On Thursday, Symantec reported first-quarter earnings that beat analysts’ forecasts, with $1.25 billion in revenue, up from $1.16 billion for the year-ago quarter.
As Symantec divests its enterprise business, its workforce will be reduced from about 12,000 employees to about 10,000, said Vincent Pilette, Symantec’s CFO.
Broadcom is purchasing Symantec’s enterprise business for $10.7 billion in cash. It previously tried to purchase the entire company but couldn’t reach an agreement.
“This is a transformative transaction that should maximize immediate value to our shareholders while maintaining ownership in a pure play consumer cyber safety business with predictability, growth and strong consistent profitability,” said Rick Hill, Symantec’s interim president and CEO. “In addition it allows the enterprise security business to grow and compete on an enterprise platform with a worldwide sales and distribution reach which can service our existing customers. It also allows our Norton LifeLock business, a world recognized leader in consumer and small business cyber safety, to operate independently and give investors a clear understanding of the growth opportunity and strong financial performance.”
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Pilette said the three main challenges of his company’s operations are speed of execution, productivity and customer focus.
“As part of our plan we developed over the last couple of months, we announced today a $100 million restructuring program aimed at improving productivity and reducing complexity in the way we manage the business,” he said. “This plan includes a 7% reduction of head count and closures of certain sites. We expect the majority of these actions, which we have already started today, to be done by the third quarter.”
Following the sale of its enterprise business, Symantec plans to eliminate about $1.5 billion in stranded costs, which were costs previously absorbed by the enterprise business but remain with Symantec, Pilette said. Symantec expects to eliminate those costs within 12 months of closing the Broadcom deal, he said.
“We believe we can complete that task without disrupting the consumer cyber safety given the business largely runs independently,” he said. “We expect that it will cost us approximately $1 billion in cash to eliminate those stranded costs and we will fund those in large part by the sales of under-utilized assets such as real estate.”
The enterprise business produced about 50% of Symantec’s revenue, including $2.5 billion in revenue and 10% of its operating income in the first quarter, Hill said.
