Symantec Changes Tune About Acquisitions, Will Focus On Organic Development

At the beginning of the year, Symantec was adamant that it would use some of the cash from its sale of storage business Veritas for acquisitions. Now, the security vendor is starting to change its tune.

"Primary in our thinking is organic development. You could see that's where our emphasis has been," CEO Michael Brown said on the company's earnings call Thursday. "M&A is clearly not the solution to getting Symantec growing again."

The Veritas sale to private equity firm The Carlyle Group put more than $5 billion of proceeds into the Symantec coffers when it closed earlier this year. The Mountain View, Calif.-based vendor ended up returning a significant portion of those funds to shareholders.

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Brown, who will be stepping down as CEO when a replacement is found, told CRN last fall that strategic acquisitions were a key part of the company's road map after the company's split from Veritas was complete.

"You can definitely expect acquisitions from us," Brown told CRN in an exclusive interview at the time.

Those acquisitions would likely be in the areas of threat protection, information protection and cybersecurity services, he said then, and would have to be "tightly aligned" with the Symantec strategy and portfolio. Brown reiterated that point on the company's fourth-quarter earnings call Thursday, saying the company could still pursue an acquisition if it were the right fit.

"I think we've been very upfront that we have been, and we'll continue to look at M&A opportunities. They need to fit very tightly with the strategy we've talked about, and they need to make sense, financially. And you can see by looking at our history that we've been very careful as we've thought about opportunities. There's been no shortage of things to look at, but we're very strict with our criteria," Brown said Thursday.

Symantec has been investing significantly in organic product development, rolling out multiple new products since the fall, including its Advanced Threat Protection solution. That solution is already gaining steam, Brown said on the call, with a $100 million pipeline in 2017.

Symantec also teased more products to come in its fiscal 2017, including expanding the ATP and DLP solutions, as well as launching Symantec Unified Endpoint Protection, a SaaS endpoint security and management solution for small and midsize enterprises; Data Center Security Dot Cloud, a solution for automatically discovering and securing workloads on Amazon Web Services and Azure cloud; and the next version of Symantec Endpoint Protection (SEP), with enhanced cloud-based detection, proactive exploit protection and machine learning.

Around the time of the split, partners had cheered Symantec's acquisition strategy, saying it would help kick-start the vendor's business as a security-only company. Partners had put names forward of vendors both big and small, from endpoint security and cloud startups to companies as big as FireEye or Palo Alto Networks.

While he had expressed excitement about the possibility of Symantec acquisitions in the past, Jason Eberhardt, vice president of strategic alliances at Chicago-based Conventus, said the prospect of increased organic innovation from Symantec is "just as exciting."

"You look at their portfolio and the [new security] focus, some of the best products in the industry, and to throw development on top of that and focus on enhancing what they already have, that’s just as exciting for me and my company," Eberhardt said.

Eberhardt said he is already starting to see traction with some of the new organically developed solutions from Symantec, particularly its new ATP solution.

"Everyone in the industry wants them to go out and do acquisitions. … But [Symantec] looked at their portfolio and their security portfolio addresses most of our joint client needs in the industry. I truly believe Symantec's portfolio is unmatched in the industry," Eberhardt said.