(Adds analysts' comments, details; updates shares)
By Abhirup Roy
March 21 Symantec Corp's shares fell as
much as 14 percent on Friday, a day after the security software
maker fired its chief executive, raising concerns about its
At least five brokerages downgraded the stock, which has
fallen nearly 17 percent in the past six months as the company,
known for its Norton antivirus software, struggles with falling
PC sales and a lackluster show on smartphone and tablets.
Steve Bennett, who took over as CEO in July 2012, had
launched a strategic review of the business after replacing
company veteran Enrique Salem, who was fired after three years
on the job.
Since Bennett took over, the company's shares had gained
more than 40 percent to Thursday's close.
"The first year was terrific, the last six months have been
terrible," MKM Partners analyst Israel Hernandez said.
"I think he got success with the low hanging fruit
initially, but when he started to tackle the difficult challenge
of changing the sales culture and reorganizing the sales
organization ... that's when the cookie crumbled," Hernandez
Jefferies analyst Aaron Schwartz said morale had improved
Schwartz said Bennett's exit, which follows several other
departures over the past seven months, could hurt morale in
He downgraded the company's stock to "hold" from "buy" and
cut his price target to $22 from $29. The company's shares were
down 12.7 percent at $18.25 in late afternoon trading on the
Symantec's chief financial officer of seven years, James
Beer, resigned last September, while its president of products
and services quit in November.
Chairman Daniel Schulman said the company was looking for a
leader who would drive the next stage of product innovation and
However, MKM's Hernandez said it would be challenging for
Symantec to get a new CEO as the market for talent had become
Analysts say Symantec has failed to evolve its antivirus and
security products fast enough and keep pace with network
security software makers such as FireEye and Palo Alto
Network security software products are in demand as they
analyse business networks and try to preempt cyber attacks,
while antivirus software removes threats after computers have
already been infected.
Research firm Gartner said in 2012 that the market for
security software was expected to grow about 30 percent to $87
billion by 2016. (r.reuters.com/dyx77v)
Symantec has also struggled to gain a foothold in the fast
growing mobile security software market, which is dominated by
companies such as Lookout Inc, NQ Mobile Inc, Avast
Software and Kaspersky.
Cowen and Co analyst Gregg Moskowitz said the departure of a
cost-conscious CEO, combined with Symantec's recent
mis-execution and absence of continuity at the top, had reduced
his confidence in the company's ability to improve long-term
Moskowitz downgraded the stock to "market perform" from
Mountain View, California-based Symantec appointed board
member Michael Brown as interim president and CEO on Thursday.
Bennett may get as much as $18.5 million in severance
payment, based on his employment agreement. His total
compensation was $13 million for the fiscal year ended March
Problems for Symantec started in 2005 after it bought
storage software maker Veritas in a $13.5 billion deal. Since
then, Symantec has repeatedly disappointed Wall Street with weak
numbers, mainly due to falling PC sales.
Symantec, whose security products usually come bundled with
PCs, reported a 5 percent decline in revenue for the third
quarter ended Dec. 27.
(Additional reporting by Soham Chatterjee in Bangalore; Editing
by Sriraj Kalluvila and Kirti Pandey)