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MARCH 14, 2005
Symantec Defends the Veritas Deal CEO John Thompson says critics of the merger are thinking too short-term as the expansion is "right next door to our core security business"
John W. Thompson doesn't have the name recognition of a Bill Gates or Larry Ellison -- yet. If the next year goes as he plans, that could change. The chief executive of security software maker Symantec (SYMC ) has almost quadrupled revenues in his six-year tenure, helping the stock appreciate more than 1,000% over that time. He's good -- but also lucky. Thompson had streamlined Symantec to focus on security, particularly antivirus software, just as that market took off, rendering the outfit immune to the slowdown going on in the software world around it. He now faces two big challenges: Pushing through a merger with storage software provider Veritas (VRTS ) that Wall Street hates, and, by yearend, competing with Microsoft (MSFT ). The scrappy Thompson, who says competitiveness is his defining quality, can't wait (see BW, 3/21/05). He spoke with BusinessWeek Online reporter Sarah Lacy about why he has taken the merger on when Symantec was already growing at 20% a year and why he's annoyed Wall Street doesn't give him more credit. Here are edited excerpts of that conversation: Q: At the recent RSA conference you described a big vision for a combined Symantec and Veritas. Have you always been a big thinker, the proverbial visionary? A: Oh I don't know. The issue with being a visionary is more about, "Can you see the world differently than someone else?" And I don't know that what I outlined at RSA was necessarily visionary. It was more a statement of the reality of what's actually occurring in our industry, and we have to align our company behind that reality. Complexity is driving our customers crazy. The cost of managing their information technology infrastructure is going through the roof. The regulatory requirement being thrust upon them here in the U.S. is just staggering. That's a reality. Maybe my colleagues in the industry haven't observed that, but it's not about some far-reaching vision. It's just about problems customers are dealing with and figuring out how we can go do something about that. Q: But you did use the word "bold" several times, and a lot of rhetoric about leading, not following. A: That's true, and the security industry for many, many years has defined itself around technology niches. My point about being bold is we need to step out of that. That's the not best way to serve customers. Define yourself around problems customers are trying to solve, and you're likely to be more in tune with what they're trying to get done. Now, does that mean you might have to break out of the mold? Sure, but so what? If you aren't willing to challenge the status quo, then how can you ever create a leadership position? Or if you're willing to accept the status quo -- I've never been willing to do that. Q: When you came to Symantec, you focused the company on security, and that lead to a lot of success. Six years later, you're broadening it and making it more than a security company. What has changed? A: Here's what's different six years ago vs. today. Six years ago, the things that were in the portfolio had no relation to one another. So we got rid of all of those things where we couldn't see some relevant link and said, "We're going to go be the best security company we know how to be." [Now] all we're doing is expanding our product portfolio in nearby markets. It's clear that backup software is an important component or tool in the recovery process when dealing with a network attack. So it's not that we're doing customer-resource-management applications and security. We're doing things that are right next door to our core security business. Q: If this is all so clear, then why is the merger so controversial? A: What has been interesting to me is: I'm jazzed everyday when I talk to customers because they get it. Q: All of them? A: Well, not every customer is going to get it, but in the main, the C-level officers, they get it. They see it. Our employees get it. Our partners get it. What Wall Street doesn't seem to recognize is, candidly, this is a leadership team that has, in fact, redefined this company and delivered on every quarter except one for the last six years. And I'm surprised all of a sudden they're unwilling to give us credit for what we've done -- more importantly, credit for our capability to do it again. So all we're going to do is prove our resolve and prove that we're right. Because we're not backing off. We know we're right about where the industry is going. Q: Do you understand their point? A: No, I don't. I don't understand it and will never understand it. I won't accept it because I think they're too focused on the short term. Q: Do you have any fear it won't get done? A: None. Fear? Fear? I'm fearless [laughing]. Q: Were you disappointed the deal leaked? A: Most deals of any size do leak. What was disappointing about it was it pushed us back on our heels rather than up on our toes. You're reacting to the news, as opposed to being proactive and telling the story the way you want to tell it. I think it hurt the deal because the news was spun by people who had a negative reaction before we could even tell the story and why we viewed it the way we did. And the timing, the 16th of December, was difficult. People went on a two-week hiatus due to the holidays, so they were just stewing because they thought we shaved some of the value off the company at the end of the year. But, candidly, my view is, you can't time strategic transactions. You do 'em when you can do 'em. 
BW MALL
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