10 Things Partners Need To Know About Symantec CEO's Departure

Brown Is Out

As it continues its transformational journey toward becoming a growing standalone security vendor, Symantec also has been making some drastic changes to the way its business operates. The latest of those changes came Thursday, as the Mountain View, Calif.-based company announced that CEO Michael Brown will be stepping down as soon as a new permanent CEO can be found for the company. Symantec also revised its earnings guidance, saying it expects sales to be lower than originally anticipated. From new leadership to the CEO search to Symantec's future strategic direction, here are 10 things partners need to know to get up to speed on the transition.

Why Now?

Symantec did not provide a particular reason why Brown is stepping down from his role as CEO. But Dan Schulman, Symantec's board chairman, said in an investor call that the board "believes that this is the right time to transition leadership," as Brown has executed on the five priorities he had as CEO: divesting Veritas, building a product road map around enterprise security, putting in new leadership, cutting costs and returning cash to shareholders.

"Mike and the leadership team ... accomplished a lot and, as a result, Symantec is better-positioned today than ever before," Schulman said on the call. "However, at the same time, we are looking forward to Symantec's next chapter of growth."

Background On Brown

Brown joined Symantec's board of directors as part of the company's 2005 acquisition of storage company Veritas, where he was also a member of the board. In March 2014, he was named interim CEO of Symantec shortly after the vendor fired then-CEO Steve Bennett, who was in the midst of overhauling the company's product and go-to-market approach. Brown brought in a new strategic plan to help reinvigorate the company, including the ultimate sale of storage business Veritas, and was ultimately named permanently to the CEO role in September 2014.

Who Will Be The New CEO?

No new CEO has been named yet, but Symantec said it has already begun the search for a new top executive with the help of an executive search firm. In the interim, Brown will remain on as CEO and a director of the company. Symantec has also formed a search committee to oversee the process, which includes independent directors Ken Hao, David Mahoney and Suzanne Vautrinot.

New Leadership

Symantec also said former company executive Ajei Gopal will be rejoining the company as interim president and chief operating officer. Gopal served as executive vice president and chief technology officer at Symantec from 2004 to 2006, and most recently held a position as an operating partner at Silver Lake, which holds a $500 million strategic investment in Symantec. Gopal will be in charge of leading a new office of the president, including Gopal; Thomas Seifert, executive vice president and CFO; and Scott Taylor, executive vice president, general counsel and secretary. Symantec management will report to the office of the president until a new CEO is appointed.

What Qualities Will The New CEO Have?

On a call about the executive changes, Schulman said Symantec will be looking for its new CEO "carefully" and with "consideration." He said the executive search committee will look for an executive who is a great leader who can "inspire and lead Symantec forward"; has experience in the software business; possesses strong operational capabilities; and who is an executive with a background in cybersecurity. He said Symantec would like to find an executive with at least three out of four of those capabilities.

How Long Will The CEO Search Take?

Symantec did not say how long it expected it would take to find a new CEO. However, Schulman said the company is focused on finding the right leader -- even if it takes a little longer.

"We will take the right amount of time and be thoughtful about this search. We have a great transition plan, … so we will do this in as expedited a fashion as we can, but in a very thoughtful manner as well," Schulman said on the call.

What's Next For Symantec?

Just because there's a search for a new CEO underway does not mean Symantec will be standing still, Schulman said on the call about the transition. He said Symantec believes the transition will allow it to "potentially accelerate its focus on product development and operational excellence."

"We are entering the next chapter of Symantec's history, where we are focused exclusively on being a cybersecurity company. We looked out over the next five years, and the skill set we wanted for that CEO and what Mike had accomplished. We felt that this was the right time to make this transition and do it in a seamless and thorough way," Schulman said.

The focus going forward will be largely on product development, building on the company's new ATP solution and expending advanced endpoint protection, cloud security and security analytics, Brown said on the call.

Why Did Symantec Lower Its Revenue Guidance?

Symantec said the company had lowered its revenue guidance for the upcoming quarter to $873 million, down from an expected range of $885 million to $915 million. The company said it now expects non-GAAP operating margins of 25 percent, down from 26 percent to 28 percent, and earnings per share of 22 cents, down from 24 cents to 27 cents. The company said the revenue drop was because of lower-than-expected license revenue and more deferred revenue than anticipated because of the company's subscription service business. That's a trend that CFO Seifert said he expected to continue as the company continues to invest in its subscription and security services businesses, though he said that deferred revenue will start to bear fruit in earnings in fiscal 2018.

How Is Enterprise Security Business Changing?

Symantec's enterprise security business was also affected by the company's faster-than-expected shift to subscription services, Seifert said on the call. Symantec adjusted its Q4 revenue prediction from between $480 million and $500 million down to $467 million. However, Brown noted, new enterprise security products are starting to gain traction, such as its new ATP product, which has 1.2 million subscriptions sold, 10 percent of which were competitive wins.

How Are Partners Reacting?

While most partner executives CRN spoke to were shocked by the CEO transition, the vast majority said the move would ultimately prove to be a good one for Symantec. They said Brown had completed much of the operational and strategic work he was brought on board to do. Solution provider execs said they would now like to see a channel-friendly, passionate and technology-driven leader brought in to breathe life into the security vendor and take it to the next level.