UPDATE 2-Symantec CEO plans layoffs, no asset sales

Wed Jan 23, 2013 7:13pm EST

* Managers will be laid off-CEO

* First dividend to be paid in June quarter

By Jim Finkle

SAN FRANCISCO, Jan 23 (Reuters) - Symantec Corp plans to slash its management ranks and reorganize into 10 business areas, but has decided not to sell off major assets after a strategic review by its new early this month

The company fired its chief executive in July and replaced him with Steve Bennett, a former CEO of Intuit who had spent more than 20 years at General Electric Co before heading to Silicon Valley.

"We looked at five different scenarios and modeled them all and talked about them all," Bennett said in an interview on Wednesday. The scenarios included divesting specific units in Symantec's portfolio such as profitable consumer anti-virus business and a sluggish storage management and backup software unit. "We can create a lot more value by running the company."

Still, he left room for the board to change its mind if any of the new businesses do not work out.

"This process is going to be ongoing and we'll deal with anything that doesn't fit," he said during a meeting with investors at Symantec's headquarters in Silicon Valley.

Bennett, who quoted former GE CEO Jack Welch during the presentation, unveiled plans to reorganize Symantec's sales force, expand its marketing efforts and change the way it sells goods over the web.

He told Reuters that the company had erred by failing to integrate many products it has acquired into suites, losing opportunities to achieve cost efficiencies and bundle complementary technologies into packages that rivals could not match.

ELIMINATING BUREACRACY

Bennett would not say how many managers would be laid off, but noted that Symantec, which has 20,000 employees, had far more managers than most companies. Symantec managers on average have few than five people reporting to them. That is about half as many managers at a typical company, he noted.

"It is hard to make decisions. It slows you down. Communication is bad. There are too many people in meetings," he said.

"We have tremendous assets, but we haven't been deploying them," he said. "Our system doesn't work."

The company forecast that the changes will boost profit margins, partly due to big increases in the efficiency of Symantec's vast sales and marketing groups. It forecast that spending on those activities will fall to 27 percent of revenue by 2017, down from 41 percent last year.

Meanwhile, spending on research and development will rise to 16 percent of revenue from 14 percent over the same period as the company boosts investment in its new product suites, which it will build over the next six months to two years.

The company's shares were holding steady at $21.66 in after-hours trade, from a close of $21.46 on the Nasdaq.

QUARTERLY RESULTS

Separately on Wednesday, Symantec reported quarterly earnings that beat expectations and said it was splitting the chief executive and chairman jobs.

It reported a profit of 45 cents per share, excluding items, for its fiscal third quarter ended Dec. 28. That topped the average analyst estimate of 38 cents, according to a poll by Thomson Reuters I/B/E/S.

The company also named independent director Dan Schulman to the position of non-executive chairman, replacing Bennett, who remains CEO and president.

Bennett said the appointment would boost oversight of the senior executive team and give him more time to focus on managing the business and executing the new plan that he laid out on Wednesday.

Symantec's problems trace back to 2004 when the company bought storage software maker Veritas for $13.5 billion in a deal the companies promised would transform the software industry. It failed to live up to those expectations and instead Symantec has reported mixed results in the years that followed, repeatedly disappointing Wall Street.

Salem inherited that legacy when he took over as CEO in 2009 from John Thompson, who engineered the Veritas acquisition. During Salem's tenure, Symantec shares fell about 19 percent, while the Nasdaq Composite Index climbed about 77 percent.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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