Symantec CEO Gives Insight Into Acquisition Strategy On Q2 Earnings Call

As Symantec approaches the completion of its split from Veritas, expected at the end of the year, CEO Michael Brown said partners and investors can expect the company to make some acquisitions. On its second-quarter earnings call Thursday, Brown said the company already has started looking at potential acquisition targets and gave some insight into what those acquisitions might look like.

The main take-away from Brown's comments is that Symantec is looking to be extremely selective with the $6 billion in cash it will pocket from the Veritas sale, choosing targets that are "tightly aligned" with the company strategy and product road map. That's an area that Symantec has fallen short on in the past, Brown said.

"We've already begun looking for what are the complementary targets out there. They need to be tightly aligned with the strategy," Brown said.

[Related: 10 Things To Expect From Symantec In Coming Months]

In particular, Brown said Symantec will be looking for complementary technology that it can bring a lot of value to with its distribution and existing technology, citing the company's past purchase of DLP technology as an example to emulate. The three characteristics the company will be looking for are: a fit with company strategy, the ability to grow it dramatically, and being able to provide a risk-adjusted return to shareholders.

In a previous interview with CRN, Brown said some of the technology areas that Symantec will look to target include threat protection, information protection and cybersecurity services. In recent months, the company has made two acquisitions: Narus in January and Blackfin in August.

"I'm confident that we have the appropriate strategy, product development team and integration capabilities that can successfully acquire, integrate and accelerate acquisitions," Brown said.

That careful, calculated approach is especially important, Brown said, with a competitive market for security, combined with a market filled with inflated security startup valuations.

"We're not in a hurry. ... There's a lot of opportunity out there, but we need to be very selective," Brown said. "It's not lost on us that most of these companies are trading at multiples of revenue."

The acquisition comments came as Symantec, Mountain View, Calif., reported second-quarter revenue of $1.4 billion, down 7 percent year over year. Net income for the quarter was $301 million, down 9 percent year over year. CFO Thomas Seifert said on the call that Symantec will look to continue to grow its revenue and its top line, in particular through its consumer licensing initiatives, a focus on upgrading customers to the latest versions, and looking to leverage cloud and data center technologies for improved cost structures.

"Our team has made a lot of progress in achieving operating and operational growth, and I am confident that we are on the right track to moving our business forward. As we enter the next stage of our transformation, we are well positioned to return Symantec to growth through both organic and inorganic opportunities," Seifert said.

Going forward, Symantec expects its third-quarter revenue to be between $890 million and $920 million. It expects its consumer security business to be down between 6 percent and 8 percent and its enterprise security revenue to grow 0.5 percent. For the fourth quarter, Symantec said it expects revenue to be between $885 million and $915 million, with a decline in consumer revenue between 5 percent and 8 percent and enterprise security growing at around 1 percent.

PUBLISHED NOV. 5, 2015