Setting out to secure its future

As it celebrates 25 years, Symantec is trying to reassure its customer base that consolidation can deliver, writes Karlin Lillingtonin Las Vegas

With a revamped product portfolio that integrates many recent corporate acquisitions, and an eye clearly set on becoming a security and risk-management giant, Symantec set a confident tone at its annual user conference in Las Vegas.

It has been a tough year for the company, which was celebrating its 25th anniversary in the city of gamblers and glitter. Symantec missed its third-quarter guidance to analysts, causing shares to slide 7 per cent, and had to acknowledge that its acquisition of Veritas had, at three years, taken far longer to fold into the company than expected.

That acquisition also brought along some unpleasant baggage: Veritas was fined $30 million (€22 million) earlier this year by security regulators in the US in a settlement over accusations of accounting improprieties.

However, chief executive John Thompson appeared in a buoyant mood throughout the event, noting in his keynote speech that the company now had the broadest product portfolio in the security industry. Symantec is not just about computer security, but security and risk management as a whole, he said.

"We invested significantly [ in fiscal year 2007] and that hurt operating margins, but we hope it will pay handsomely off this year because we have a rewritten portfolio of products," Thompson told analysts.

The company's key product and strategy announcements reflect an ambitious take on an increasingly complex world for IT managers in organisations.

Storage United, for example, is Symantec's name for its unified, single point of control for its portfolio of data centre storage management software. It will link Symantec's NetBackup data protection, Storage Foundation storage management tools and Enterprise Vault archive technology under a common set of services.

Symantec Endpoint Protection, also referred to throughout the event by its code name "Hamlet", brings together several products and acquisitions to supply a single point of control product to monitor organisation desktop PCs, laptops, databases, virtual networks and other "peripheral" IT items.

In his keynote speech, Tom Kendra, president of Symantec's Security and Data Management group, said the company was working on a project codenamed "NextGen", to blend two of its compliance assessment products, Symantec's Enterprise Security Manager and Control Compliance Suite, for release in 2008.

Symantec pointedly noted the technologies gained through acquisitions that were integrated in each of these products.

Thompson and other executives repeatedly said that Symantec felt organisations could not easily manage numerous products from different vendors, especially with threats needing to be managed across several IT layers and with increasingly complicated international compliance regulations such as the Sarbanes-Oxley Act in the US.

Its single point of control consoles for its new product suites are, it said, the way forward for managing numerous systems and security concerns.

Some analysts say that moving organisations to a single, large-scale vendor and shifting the way in which security management is done to a single console - "taking complexity out" is how Thompson phrases it - is a major mindshift for organisations and will be obtained at a premium price.

Symantec's major challenge is to convince organisations that their vision is the right vision and worth paying for.

Many analysts and journalists have been critical of Thompson's drive to buy in new technologies and turn the one-time antivirus company, best known for its Norton antivirus, firewall and computer-management tools, into a large-scale security and computer-management company.

Like several other chief executives, notably Cisco's John Chambers and Oracle's Larry Ellison, Thompson strongly believes that the software industry has entered a period of consolidation which offers opportunities for larger players such as Symantec.

Symantec's buying spree ramped up from 2004 onwards. In the past three years it has swallowed companies including spam filter company BrightMail, security consultancy @Stake, storage management company Veritas, security software firm Sygate, anti-phishing company WholeSecurity and management software firm Altiris.

"You'll see us continue to acquire smaller technology companies and companies that have reached scale in markets that we want to go into," Thompson said in an interview. "I think we cannot ignore what is going on across industry. It's in a state of consolidation. Either we use our resources to consolidate, or we shrink to inconsequence, and that's not going to happen while I'm here."

Symantec is also putting its money where its mouth is - buying back some $3 billion of its own shares. In Las Vegas, it announced it had completed an initial $1 billion buy-back initiated six months ago and said it would go after another $2 billion when market conditions were favourable.

While some wonder whether the new products will be able to deliver on their ambitious claims, several key analysts liked what they saw. Robert Baird and Co and Goldman Sachs analysts, among others, have upgraded Symantec stock, causing shares to rise earlier this month.