Updated 01/08/2020 – Broadcom is selling off parts Symantec less than 2 months after closing the deal. Reports have consulting giant Accenture buying Symantec’s Cyber Security Services unit for an undisclosed amount.
Under the deal, Accenture will take over Symantec’s global network of six security operations centers located in the U.S., the U.K., India, Australia, Singapore, and Japan. The SOC’s provide threat monitoring, analysis, and incident response services. Accenture says it will use the Symantec business unit to boost its managed security services.
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Updated 09/17/2019 – As predicted below, Symantec has started slashing jobs. According to reports, up to 230 Symantec employees will be terminated on October 15, 2019.
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I could have saved a bunch of people a bunch of money– IF you had read this post – you would already have a doubt about this deal – before professional prognosticators Forester said the same thing on August 9th. In their report analyzing the deal, the market researcher cited Intel’s 2010 acquisition of McAfee and subsequent $3 billion loss spinning the security company to private equity in 2016. They said the deal should serve as a warning to CISO’s about the future of Symantec’s product portfolio under Broadcom. Well NO DUH
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Broadcom (AVGO) has acquired Symantec‘s (SYMC) enterprise security business for $10.7 billion in cash. The two firms consummated their hot-and-cold bromance M&A discussions in writing today (08/08/2018).
The deal is expected to bring in over $2 billion in annual revenue for the San Jose, CA-base firm. Broadcom intends to fund the transaction with proceeds from new committed debt financing. The transaction is expected to close in Q1 of Broadcom’s fiscal year 2020.
Broadcom, historically a semiconductor business has been on an M&A tear in the past few years, buying its way into a broader market position. First, with the 2016 – $5.9 billion purchase of network equipment vendor Brocade. Next was the 2018 – $18.9 billion acquisition of CA Technologies. Followed by today’s $10.7 billion pick-up of Symantec. In the presser Broadcom CEO Hock Tan called the Symantec purchase, “... the next logical step in our strategy … expanding our footprint of mission-critical infrastructure software within our core Global 2000 customer base.”
Rumors of the purchase first appeared in the press on July 03, 2019, with “advanced talks” happening on July 15th for purchase all of Symantec for $22 Billion, but by July 15, Symantec had reportedly walked away from the table. Reports (which appear to be true) at the time were that Broadcom was after just the enterprise-cybersecurity software business; leaving the consumer the business as an independent company or a spin-off to somebody else.
ChannelE2E says the potential deal makes sense on paper. Broadcom is known for acquiring struggling or slow-growth enterprise technology businesses, stripping out costs and boosting profitability. They explain that Broadcom’s secret to M&A success is clearly communicating staff reduction plans to acquired businesses, investors, and associated end customers. Broadcom is known for swift M&A staff cuts that include reasonable severance packages for employees — rather than long, drawn-out, torturous headcount reductions.
ChannelE2E also correctly predicted the Symantec team could face job cuts, layoffs, or potential business spin-offs as a result of the deal. Right on queue, Symantec announced layoffs of roughly 7% of its more than 11,000 employees during FY 2020. The company also plans to downsize, vacate or close certain facilities and data centers in connection with the restructuring plan.
The Symantec name will be sold to Broadcom as part of the transaction. Interim Symantec CEO Rick Hill said the remaining consumer business contributed 90% of the company’s total operating income, and the company expects to be able to continue to grow revenue for its Norton LifeLock business in the mid-single digits going forward. CEO Hill tried to spin the sale as a win in a presser.
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.
Symantec’s struggles in recent years which may have lead to the buy-out are chronicled by Channele2e. Former CEO Greg Clark resigned in May 2019 amid weak enterprise cybersecurity software revenues. Executive team departures over the past year have also included Symantec’s CFO, chief operating officer, chief marketing officer and the head of its go-to-market teams. Board member Rick Hill has been interim president and CEO of the company since that time.
Symantec was late to cloud-and mobile-centric cybersecurity services, and faced intense competition from next-generation endpoint protection providers, including:
- CrowdStrike – Which recently completed a very successful IPO.
- AlienVault – Hot-shot next-gen endpoint protection provider that was bought up by AT&T in 2018 ahead of a potential IPO.
- Cylance – Another hot-shot next-gen endpoint protection provider that was bought up by BlackBerry in 2019 ahead of their anticipated IPO.
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Deja Vu All Over Again
The sense of deja-vu all over again you are experiencing is real. Intel and McAfee tried this nearly a decade ago. Intel purchased top Symantec competitor McAfee for $7.7 billion. The expected “synergies” (WTF that means) never materialized. Intel ended up spinning off McAfee to private equity firm TPG in a 2016 sale that valued the business at $4.2 billion.
Related Posts
- Size of the information security technology market from 2016 to 2022 (in billion U.S. dollars) (Statista)
Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.
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