Symantec plans to cut about 8 percent of its global workforce amid disappointing quarterly revenue and earnings forecasts as the software vendor struggles to boost its enterprise security sales and shed its reputation as a legacy firewall vendor.
In documents filed on Aug. 2, the company said the planned cuts will target about 900 employees and are part of a larger restructuring plan to save about $115 million annually. It will also cost Symantec about $50 million, primarily for severance and termination benefits. The company says it expects to complete the layoffs in fiscal 2019.
“We expect that these actions will partially benefit fiscal year 2019 operating margins and will have full effect for fiscal year 2020,” said Nick Noviello, executive vice president and CFO at Symantec, on the company’s fiscal first quarter 2019 earnings call.
Symantec reported a 5 percent drop in net revenue for the quarter to $1.17 billion. Its consumer security revenue grew 13 percent year over year, but its enterprise revenue fell 14 percent to $556 million.
CEO Greg Clark said the company’s Integrated Cyber Defense platform, which includes endpoint, network, and cloud security “continued to gain traction” with enterprise customers. “In spite of this, in the first quarter we experienced a shortfall in enterprise security implied billings, which declined $111 million, or 20 percent year over year … and was below our expectations of a flat year over year comparison,” Clark said on the earnings call.
Internal Probe Ongoing
The lower-than-expected results and companywide restructuring sent Symantec’s stock tumbling with shares falling as low as $17.98 on Friday. This was its biggest drop since May, when the company revealed an internal investigation into concerns raised by a former employee about Symantec’s financial disclosures.
On the earnings call, executives said the investigation is still ongoing.
When asked if the probe resulted in negative customer response and hurt quarterly earnings, Clark said he couldn’t comment on it. He did admit, however, “that Q1 had some negative press in the market during the quarter.”
Meanwhile newer security companies that compete against Symantec have been on an upward trajectory this year, with Zscaler raising $192 million and Carbon Black raising $152 million in their initial public offerings. And last week Cisco inked a deal to acquire Duo Security, another Symantec competitor, for $2.35 billion.