Symantec Cuts Global Workforce After Dismal First Quarter
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Symantec plans to lay off 8 percent – or about 900 – of its 11,000-plus workforce after reporting disappointing revenue and profit for its first quarter and a weak outlook for its second quarter.
The cybersecurity giant announced a set of cost-reduction moves designed to eliminate redundancies and to focus its resources on key strategic opportunities. This includes a fiscal 2019 restructuring plan with “targeted” workforce reductions.
Symantec’s Nicholas Noviello
Symantec expects to incur $50 million in costs in connection with the restructuring plan, mostly for severance and termination benefits. It expects to save about $115 million annually from the restructuring.
The cuts will begin in fiscal 2019.
“We expect that these actions will partially benefit fiscal year 2019 operating margins and will have full effect for fiscal year 2020,” said Nicholas Noviello, Symantec’s chief financial officer, during the earnings call.
Symantec wouldn’t provide any further details regarding the layoffs.
Eric Parizo, senior analyst of enterprise security with GlobalData, tells Channel Partners it might seem like Symantec is taking dramatic steps, but the company has “dramatically transformed itself in recent years.” It shed Veritas in a $7.4 billion sale, bought Blue Coat for $4.65 billion, sold its PKI business to DigiCert for $950 million and added $1.75 billion in new venture capital investment, which was quickly used in its purchases of LifeLock, Skycure and Fireglass, he said.
GlobalData’s Eric Parizo
“Symantec no doubt has both staffing redundancies as well as legacy technology – such as Time Stamp Authority servers it no longer needs after selling the PKI business – that need to be addressed,” he said. “That said, Symantec’s overall strategy is built around two financial goals: stopping the bleeding in its consumer business, and dramatically growing the enterprise business to make up for the long-term revenue decline in the consumer business. Hence, the restructuring is also part of its increased urgency at Symantec to bolster the profit margins in the enterprise business.”
Symantec’s enterprise product strategy – focusing on endpoint, web/cloud and data protection – is sound, but the company is still figuring out how to sell, deploy and ensure success in large, multiproduct deals, as indicated by its slower sales cycles in North America, Parizo said. Only time will tell if Symantec can figure it out.
“More broadly, I’m concerned that recently disclosed layoffs at both Symantec and McAfee, two of cybersecurity’s largest and most prominent companies, as well as unannounced reorganizations at other vendors, are signs that the multiyear tailwinds in the cybersecurity market are coming to an end,” he said. “Many enterprises have grown security spending significantly in recent years, so it’s only logical that that growth can be sustained only so long, and vendors are going to start feeling the ramifications of that slowdown.”
Rik Turner, principal analyst at Ovum, said he gets the “feeling with them that they are on their way back from the brink, in that they were in a bad state three or four years ago, with a new CEO every few months.”
“Then came the divorce from Veritas to focus on security; then the big change was when they bought Blue Coat, as the entire management team at Blue Coat became the management team for Symantec,” he said. “Since then they have seemed to be back behind the wall, with a clear vision of where they want to go. Still, as by far the largest IT security firm on the planet, I guess they still face the challenges of making a lumbering great organization more agile while at the same time keeping Wall Street happy.”
