Symantec Execs Give Details

Symantec Corp. (Nasdaq: SYMC) CEO John Thompson today painted a picture of what the company will look like once its merger with Veritas Software Corp. (Nasdaq: VRTS) is approved by both boards of directors (see Symantec & Veritas: It's a Deal).

The $13.5 billion merger announced last month places Symantec in a new breed of combined storage and system companies that can offer CIOs products in several areas -- in this case, storage management and security.

These are the leaders,” Thompson told analysts during a conference call. “It’s not about putting a big company with a broken down company.” [Ed. note: Touchy touchy! Who suggested that?]

Thompson described it as a multibillion-dollar titan in its first year whose headquarters can barely hold the new 13,000-person workforce. Indeed, Thompson says Symantec will maintain its Cupertino, Calif., headquarters “for the moment,” but might have to look for bigger digs.

Thompson also gave guidance for the first full year of the merged company. He forecasts revenue of $5 billion and earnings per share of $0.99 for the fiscal year that runs from April 1 through the end of March 2006. The guidance, arrived at by combining the totals of the two companies' revenue forecasts, was predicated on the companies’ directors approving the deal early in the second quarter this year.For all its size and revenue heft, it’s not yet clear how the merged Symantec and Veritas will add up to more than the sum of its individual parts. And the thought of a transition phase has Veritas competitors dreaming of gaining market share (see Vulnerable Veritas).

At least one financial analyst thinks the Symantec-Veritas merger benefits will become clear in time. RBC Capital Markets

analyst Tom Curlin says storage vendors that can also offer systems management will have a leg up in enterprises. He points out that EMC Corp.’s (NYSE: EMC)acquisitions of VMware and Smarts, and Veritas’ acquisitions of Ejasent and Jareva were moves in that direction. (See EMC Gets Smarts, EMC Gobbles VMware), Veritas Nabs Ejasent, and Veritas to Acquire Precise, Jareva.)

“The Symantec deal doesn’t offer too much synergy today, but it will soon,” Curlin says. “You’re going to have four or five vendors competing for mindshare at the CIO level.”

EMC obviously expects to be one of those vendors. So will Oracle Corp. (Nasdaq: ORCL), which last month gobbled PeopleSoft Inc. (Nasdaq: PSFT) for $10.3 billion (see The Price Is Right for PeopleSoft).

But perhaps a bigger threat is Microsoft Corp. (Nasdaq: MSFT), which will likely become a direct competitor of the new Symantec in both antivirus and data protection this year (see Microsoft's Recovery Plan).Thompson and Veritas CEO Gary Bloom took shots at Microsoft today when asked about how its upcoming Longhorn operating system might offer competition. Thompson said there’s “a desire to buy security from a true security company,” and Bloom pointed out that Microsoft already said it would drop storage capabilities from the initial version of Longhorn.

Thompson fleshed out other details that have been dribbling out since the deal was announced. He says, for instance, that the combined company will maintain the Symantec name, but individual products will retain their brands.

As for executives’ roles, Thompson and Symantec CFO Greg Myers will retain their positions. Bloom becomes responsible for sales, service, and corporate development as company president. Veritas CFO Ed Gillis is responsible for the integration of the companies, and Symantec COO John Schwarz will head engineering and product development.

Thompson says he and Bloom have overseen a combined 29 acquisitions, so he expects smooth sailing during the integration. He expects the merger will allow the company to shave $100 million off costs over the first year, with the focus on “non headcount-related activities.” When asked to elaborate, he said Symantec can save a lot of money by eliminating “trinkets and trash.”

— Dave Raffo, Senior Editor, Byte and Switch0