Yahoo Finance Symantec Inks Deal with Boeing's Narus Security Division - Analyst Blog
According to a Bloomberg report, Symantec Corporation (SYMC) has entered into an agreement with The Boeing Company (BA). Per the agreement, Symantec will purchase technology rights from Boeing’s cybersecurity business unit, Narus Inc. As part of the deal, Symantec will also hire 65 engineers and data scientists from Narus security division.
Narus specializes in manufacturing Internet-filtering software and network monitoring technologies that are used widely by intelligence agencies and the U.S. government. It was acquired by Boeing in 2010 in a bid to expand its revenue stream.
California-based Symantec is well known for the Norton Antivirus software and is currently focused on strengthening its presence in the cybersecurity market. In order to do so, it planned to split its data-storage and cybersecurity businesses into two publicly traded companies in October 2014.
Post-split, Symantec will operate as two separate entities – the security business and the information management (“IM”) business.
The separation is a positive for Symantec and aims at streamlining its operations and maximizing shareholder’s value. This strategic move will also likely revive its operational performance.
On the one hand, adoption of the company’s offerings in the security market has been strong over the past couple of years. On the other, the company, serving 75% of the Fortune 500 companies, enjoys a leading position in the IM business.
Therefore, strength in the individual businesses make them more attractive as acquisition targets for companies like Hewlett-Packard Company (HPQ), Cisco Systems, Inc. (CSCO) and NetApp, Inc. (NTAP).
Even if this doesn’t happen, the split enables a customized approach to two different kinds of businesses, which might not have been possible as a single entity.
The company has also realigned its organizational framework by eliminating several mid-level management positions to create a leaner operating structure. It also outlined a go-to-market strategy, which involves reorganization of its sales force into specialized groups to look after functional areas of security and information management.
Through introduction of enhanced versions of storage management and Internet security solutions, Symantec is making an effort to attract small and mid-sized businesses. These solutions are primarily targeted at information-driven businesses.
Symantec has been consistently reporting upbeat numbers, having beaten earnings estimates in the last four quarters, with an average beat of 15.16%. We appreciate Symantec’s present focus on restructuring its business, which will favor long-term growth.
However, competition from other bellwethers such as Microsoft and Intel remain headwinds. Also, uncertainty over PC sales adds to its woes.
Currently, Symantec has a Zacks Rank #3 (Hold).
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