When former Symantec CEO Mike Brown left the company in April, I wrote a blog post about what I would do if I were recruited as Mike’s replacement. While one of my suggestions was for Symantec to resume M&A activities, I was really thinking about a strategy for filling in product gaps—perhaps Symantec could pick up LogRhythm to add a leading SIEM to its portfolio or grab Carbon Black for endpoint security analytics and forensics.
I never even contemplated a big-time merger, so I was as surprised as anyone when Symantec announced its plan to acquire Blue Coat. I’ve had a few hours to digest this news and will certainly learn more in the days to come. Nevertheless, as an industry analyst, I can’t help but voice my early opinion on this deal.
The good stuff:
1. There isn’t much overlap to this deal, it actually brings together leading products on both sides. Blue Coat comes with its leading network proxy and web security offerings, as well as burgeoning businesses in network security analytics and cloud security. Alternatively, Symantec is big in endpoint security, email security, DLP and managed service. There are real synergies in bringing some of these piece parts together—especially as a bridge between traditional IT and cloud security.
2. The Blue Coat management team has gotten stronger and stronger over the past few years. This group has not only turned the company around, but it's also transformed it into a focused cybersecurity leader. This team should have the bandwidth to bring its management leadership and discipline to Symantec.
3. Both companies are very strong in threat intelligence and research. As these assets are combined, the new Symantec should be a clear leader in this space.
4. There is clearly an opportunity to build a $5 billion-plus enterprise-class cybersecurity technology and services powerhouse. Cisco, IBM, Palo Alto Networks and Trend Micro are moving steadily in this direction. Why not Blue Coat/Symantec?
The question marks:
1. CEO Greg Clark has some work ahead to amalgamate the cultures and management teams of two large and dissimilar organizations. This may be especially true on the Symantec side, as thousands of employees are suffering from corporate change fatigue. The old Symantec never quite jelled with Veritas, so there is reason for concern here.
2. In spite of the merging of diverse product portfolios, the new Symantec will still have some product gaps to overcome. For example, there is still no real security analytics play and some remaining holes in network security. Symantec also faces a swarm of next-generation endpoint barbarians at the antivirus door and needs to do something to protect its lucrative endpoint security base. So, there needs to be more acquisition work ahead in spite of this massive deal.
3. It’s hard to throw dozens of new products at a sales team or channel all at once and expect results, so while the new Symantec talks about end-to-end coverage, it will take a while for its salesforce and channel to catch up. In the meantime, there will likely be overlapping organizations and higher-than-average cost-of-sales. And while both companies have strong products, I would argue that neither sells at a strategic level to C-level executives. Symantec will have to build this skill set by recruiting highly paid sales and cybersecurity professionals.
4. Wall Street is fairly bullish on the deal so far. Why? It likes the financial engineering and commitment from private equity folks and sees the opportunity to create an Oracle- or SAP-like enterprise software vendor in cybersecurity. That said, investors won’t be patient—five CEOs in eight years gives Symantec a very short leash at best.
Symantec needed to do something, and by gosh it did. The post Thoma Bravo version of Blue Coat is lean, focused, well managed and heading in the right direction. The new Symantec must proceed by rounding out its portfolio, getting rid of dead wood, recruiting more cybersecurity talent and executing like crazy. Lots to do still, but at least it now has a solid starting point.