Must-know: Symantec Corp's 1Q15 earnings review (Part 3 of 12)
In January 2013, Symantec (SYMC) announced its initiative, Symantec 4.0, that would be a stepping stone in its transition from a device centric company, which caters to endpoint protection and data centers, to a digital information security and management provider.
The above presentation highlights the key points that Symantec plans to enforce through its 4.0 corporate strategy, headed by Steve Bennett.
Simplifying the organizational structure
Under the strategy, Symantec restructured the sales organizations into renewals business teams. It also reorganized the direct sales force into functional areas of information security and information management. Symantec also announced 1,000 layoffs and $275 million to be kept aside for severance pay.
Improved product offerings
Symantec stated that start-ups, specialists, and integrated stack providers inhabit the competitive landscape. Along with CommVault (CVLT) and McAfee (INTC), Symantec considers itself to be a specialist. The start-ups, which includes Dropbox, focus on specific products or services. IBM (IBM) and Microsoft (MSFT), on the other hand, are platform-focused and fall under the category of integrated stack providers.
Symantec identified consumer and enterprise security as the area of focus. Symantec, through its focus on higher growth and margin areas, will launch “offerings” that can be tailored across customer needs, be scalable, be integrated, and be useful across platforms.
The company aims to achieve 5% or more organic revenue growth and more than 30% operating margins by 2015. To grow organically, it announced an increase in research and development (or R&D) spending from the current ~14% to 16%.
Change in management
Management terminated Steve Bennett, who spearheaded the Symantec 4.0 strategy, as the strategy execution took longer than planned. The company is on the lookout to find a new CEO. Currently, Mike Brown serves as Symantec’s interim president and CEO.
The new initiative involved cost cuts, layoffs, major internal changes, a new go-to-market strategy, and streamlined product offerings. With its 4.0 strategy, Symantec has reallocated its resources to develop new integrated offerings, restructured the sales organization, eliminated duplicate organizational and operating structures, redesigned its channel strategy, and simplified its management structure.
Browse this series on Market Realist:
- Part 1 - Must-know: An overview of Symantec’s 1Q15 earnings review
- Part 2 - New consumer group formed for Norton expected to drive margins
- Part 4 - Must-know: Symantec invests in high growth and high margin areas
- Investment & Company Information
- Symantec Corp