Symantec's Revolving Door
Posted by: Sarah Lacy on January 24, 2006
Things just keep looking dicier at Symantec. First there was the controversial Veritas merger. Then came fears of McAfee cannibalizing the consumer business through its relationships with internet service providers. Add in a few questionable quarters and high profile defections of COO John Schwarz, CFO Greg Myers and, as of late yesterday, former Veritas CEO Gary Bloom and it’s no surprise the stock has fallen a whopping 48% since the pre-deal time frame of early December 2004.
It’s common for the CEO of an acquired company to leave after, say, a year. In fact, in a Q&A before the deal even closed Bloom was non-committal: “I have to wait and see. I’m going into it with the intention of staying. I’m having fun and helping customers achieve great things and (I will) have an influence in the company. If those three align, I’ll still be there.” Apparently they didn’t.
But here's why it's surprising nonetheless:
Reason #1: Early on, no one thought he’d stay. Thompson, Schwarz and Myers were seen as one of the most elite management triumvirates in software-dom. Add in Bloom and it gets a little crowded at the top. But when Schwarz and Myers left Symantec was suddenly light on top management and Bloom had more elbow room. Company watchers figured he was there to stay, marveling at the way things worked out for him.
Reason #2: RSA. It's the biggest security conference of the year and to my knowledge John Thompson has done a keynote almost every year since it was a tiny, tiny conference. Last year, he had marquee positioning just after Bill Gates and he seized the opportunity to sell the merger and defend against the oncoming turf war with Microsoft. He was phenomenal. The crowd was in the palm of his hand. This year's conference is about two weeks from now. And Thompson wasn't on the agenda. Who was doing the big keynote for Symantec? Bloom. To me, that says this departure was sudden. Say you are the biggest security company in the world, at the biggest security conference, at a pivotal time for the company. You’re going to knowingly send a lame duck to the podium? Doesn’t add up.
So what gives? Likely a clash between Bloom and Thompson, say company watchers. Symantec is in a tough position now, and Thompson's legacy is on the line. Tempers are likely flaring. Gene Munster from Piper Jaffray says people have been describing Thompson as “looking worn out and tired.” “You wonder if it gets to a point where he starts doing some more dramatic things,” Munster says. He also notes that the current quarter is the first time the Veritas and Symantec sales teams were merged. That too, could have sparked something.
So either Bloom decided that having sold his company, he was ready to sit on a beach for a while or the embattled Thompson showed him the door. Hey, look on the bright side, Symantec, at least arch rival McAfee had bad news today too.