Symantec abruptly fires CEO

Symantec CEO Steve Bennett has been fired after less than two years at the helm. The company will now start the hunt for its fourth CEO in five years.

Symantec board member Michael Brown has been named interim president and CEO effective immediately. Brown joined the Symantec board following its merger with VERITAS Software in 2005 and is former CEO of backup and storage company Quantum Corporation.

According to Reuters, Bennett may be eligible for a severance payment of as high as US$18.5 million, based on his employment terms. His total salary for the financial year ending in March 2013 was US$13 million.

Announcing the move, Symantec chairman Daniel Schulman said the decision to let go of Bennett was “the result of an ongoing deliberative process, and not precipitated by any event or impropriety”.

He said the company remains committed to its target of achieving greater than 5% organic revenue growth and greater than 30% operating margins by FY17.

By comparison, the company is forecasting a decline in revenue for its fiscal fourth quarter - from US$1.75 billion a year earlier to between US$1.61 and US$1.65 billion. But operating margins are expected to improve from 24.1% to between 24.5% and 26% over the same period.

Despite the maintained target, the announcement sent Symantec’s Nasdaq-listed stock plunging 12.94% on Friday to US$18.20. The decision has also generated much speculation as to why Bennett was fired.

The New York Times cites an unnamed person close to the Symantec board as stating that directors decided that Bennett was not moving quickly enough to innovate on new products and come up with new growth initiatives.

According to the source, the decision was also motivated by several recent high-profile executive departures - including the resignations of CFO James Beer and president of products and services Francis deSouza - as well as fears the company is losing its ability to recruit top engineering talent.

Bennett was named CEO in July 2012 with the express purpose of turning around what directors saw as an underperforming company. Bennett replaced ousted CEO Enrique Salem, who served in the role for three years. Salem himself took over from long-serving chief John Thompson, who retired in 2009.

Bloomberg quotes FBR Capital Markets analyst Daniel Ives as stating that the decision to let go of Bennett at this time is “jaw dropping. Bennett is the face of the turnaround at Symantec. Investors bought into him leading this turnaround, so the fact that now he gets fired at this critical juncture, I view it as a major black eye.”

Bennett had blamed a recent decline in revenue on an ill-fated salesforce restructuring that disrupted customer relationships rather than having the intended effect of jumpstarting revenue growth.

MKM Partners analyst Israel Hernandez told Reuters that Bennett did will over his first year in control at Symantec, but added that the last six months have been “terrible” by comparison.

“I think he got success with the low-hanging fruit initially, but when he started to tackle the difficult challenge of changing the sales culture and reorganising the sales organisation ... that’s when the cookie crumbled,” Hernandez said.

Like the rest of the market, Symantec is also also grappling with the ongoing slump in PC sales, due in part to global economic weakness and mobile substitution.

In an opinion piece for Network World, Enterprise Strategy Group principal analyst Jon Oltsik said Symantec’s next CEO should focus the company’s growth ambitions on the managed and professional security services segment. Symantec should also streamline its portfolio of existing products, contract types and sales teams, and work to ensure the company’s products are easier to sell and consume.

“Symantec is a good company with some strong products and dedicated people. Yes, there are hard decisions and difficult times ahead, but I do believe that under the right stewardship, the company could turn around quickly and prosper,” he said.