Symantec names Bennett CEO; Q1 solid, outlook light

Symantec names Bennett CEO; Q1 solid, outlook light

Summary: Former Intuit chief Steve Bennett takes over as CEO of Symantec. Can the security vendor juice growth and fend off critics?

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Steve Bennett, Chairman of Symantec, is in as CEO of the security software company. Enrique Salem is out after Symantec's board determined that the company just wasn't getting the performance it needed. 

In a statement, Symantec said that there was no one particular reason for Salem's departure. Bennett noted that "it was the board's judgment that it was in the best interests of Symantec to make a change in the CEO."

Bennett also noted that Symantec's assets are strong yet underperforming. Bennett added that the company would "build upon the significant assets in place to help Symantec accelerate value creation for all of its stakeholders."

Shares of Symantec gained nearly 15 percent after the announcement on hopes for better quarterly performance. Symantec's earnings results have been hit or miss relative to Wall Street estimates. In addition, Symantec's storage unit and security division rarely seem to be in sync in terms of financial performance.

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Stifel Nicolaus analyst Todd Weller said in a research note:

While the executive change was not expected, it is not completely surprising in light of the persistent challenges at Symantec. We believe the move will be viewed as a short-term positive, based on the potential for future change.

Indeed, Bennett has a good track record. Bennett joined Symantec's board in 2010 and became chairman a year later. He had been CEO of Intuit from 2000 to 2007 and was an exec at General Electric.

Barclays analyst Raimo Lenschow said Symantec could have been a good target for activist investors, which have targeted BMC and CA. These activists prod companies to make better use of their cash and deliver more value to investors. Symantec didn't offer a dividend, but had plenty of cash. The move to name Bennett CEO indicates Symantec is ready to shake things out without outside prodding.

Returns on Symantec shares lagged the S&P 500 year to date and trailed the stock performance of most enterprise software peers.

Separately, Symantec reported fiscal first quarter earnings of $172 million, or 24 cents a share, down from $191 million a year ago. Revenue for the first quarter was $1.67 billion, up 1 percent from a year ago.

Non-GAAP earnings per share were 43 cents in the first quarter. Wall Street was looking for 38 cents a share on revenue of $1.65 billion.

Overall, Symantec's units delivered flattish to single digit growth rates. The consumer business fell 1 percent from a year ago, security and compliance was up 7 percent and storage and server management fell 2 percent.

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As for the second quarter outlook, Symantec projected non-GAAP earnings between 35 cents a share and 39 cents a share. Symantec also said that second quarter revenue will be between $1.63 billion and $1.66 billion. Wall Street was looking for earnings of 40 cents a share on revenue of $1.69 billion.

Bennett's challenge will be stringing together a series of better-than-expected quarters.

Topics: Security, Enterprise Software, Storage, Symantec

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