Symantec Corp. (SYMC:US) fired President and Chief Executive Officer Steve Bennett after less than two years on the job, as the biggest maker of security software for personal computers struggles with a shift to mobile devices.
Director Michael Brown was named interim CEO while the Mountain View, California-based company seeks Bennett’s replacement. A special committee of the board will begin looking for a permanent CEO with an executive search firm, Symantec said in a statement yesterday.
Bennett, who took over as CEO after Enrique Salem’s ouster in July 2012, has presided over slowing sales growth as a record PC slump curbs spending on Symantec’s antivirus software, which is often bundled with new computers. The stock dropped 13 percent, bringing the decline in the past year to 25 percent. Bennett blamed lower revenue (SYMC:US) in recent quarters on a sales-force restructuring that was meant to help restart growth and instead disrupted customer relationships.
“It’s jaw-dropping,” said Daniel Ives, an analyst at FBR Capital Markets & Co. in New York who has the equivalent of a hold rating on the stock. “Bennett is the face of the turnaround at Symantec. Investors bought into him leading this turnaround, so the fact that now he gets fired at this critical juncture, I view it as a major black eye.”
Symantec shares fell $2.71 to $18.20 at the close in New York, the biggest decline since July 2009. The stock was downgraded by UBS AG, Jefferies, Robert W. Baird & Co., Cowen & Co. and MKM Partners.
“Steve Bennett’s departure follows an unexpected wave of departures of key executive management members that followed the unveiling of January 2013 reorganization plan,” Steve Ashley, the analyst at Robert W. Baird & Co., wrote in a note downgrading the stock to a hold rating. “The CEO transition only adds to the fluidity of the business model transition, and we are choosing to step to the sidelines pending stability of the leadership team.”
Several top executives have left the company in recent months, including Francis deSouza, president of products and services, and James Beer, who had been chief financial officer since 2006 and left to become CFO of McKesson Corp. (MCK:US)
Symantec remains committed to its target of revenue growth of more than 5 percent by fiscal 2017, Chairman Daniel Schulman said in the statement.
“Our priority is now to identify a leader who can leverage our company’s assets and leadership team to drive the next stage of Symantec’s product innovation and growth,” Schulman said. “This considered decision was the result of an ongoing deliberative process, and not precipitated by any event or impropriety.”
Bennett previously served as CEO of TurboTax software maker Intuit Inc., and before that as an executive vice president of General Electric Capital. Bennett may receive as much as $18.5 million in severance, according to his employment contract.
Symantec shares soared after Bennett’s appointment as CEO of Symantec, more than doubling (SYMC:US) in his first year on the job on investor optimism that he would deliver more consistent results.
One of Bennett’s first major actions was eliminating 1,000 jobs, or about 5 percent of staff, in an effort to bolster profit. The honeymoon ended as sales sputtered, top executives left and the PC market worsened, dragging down Symantec’s biggest business unit.
Sales in Symantec’s consumer division, which includes the Norton line of antivirus products, fell 2.8 percent to $2.17 billion in the nine months ended Dec. 27. Revenue in the data-backup division declined 2.6 percent to $1.9 billion in the same period.
The company still likely won’t be able to hit its targets without acquisitions or selling business units, in part because of declines in demand for PC security software, Joel Fishbein Jr., an analyst at BMO Capital Markets in New York, wrote in a research note.
One area where Symantec has lagged its peers is security software for smartphones and tablets, a growing market that is dominated by companies including Lookout Inc., which has more than 50 million users and has raised more than $131 million from venture capital firms, and NQ Mobile, a Chinese company with more than 100 million active monthly users.
In recent interviews, Bennett declined to directly discuss the PC industry’s impact on Symantec. In January, he attributed weaker results largely to his overhaul of the sales force, which involved reassigning accounts and training employees to sell different products. He said the company was “making progress” and that the restructuring was complete.
“I’m very pleased with the numbers we’re delivering given the kind of transformation we’ve undergone,” he said in an interview at the time. “Even though we’re a little short on revenue, we’re delivering faster growth for the future.”
Symantec declined to make Bennett available because he’s no longer an employee. Bennett couldn’t be directly reached.
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