For Symantec CEO, a legacy of growth

Company is poised to weather tough economy with diverse portfolio and strong customer base, analysts say.

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John Thompson is retiring from Symantec Corp. at a time when most security vendors are worried about tightening IT budgets. But industry analysts say Thompson leaves a legacy of diversification that should help the company weather the downturn in the economy.

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Thompson, 59, will remain CEO of Symantec until April 2009, when chief operating officer Enrique Salem takes the helm.

"The past 10 years have been the highlight of my career," Thompson said in a conference call with industry analysts. "Working at Symantec has exceeded all my expectations."

Thompson and the board worked on a succession plan for the past two years, he said. "I thought 10 years was enough…Now is the ideal time to start the transition process."

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He oversaw Symantec's evolution from a consumer-oriented antivirus vendor in the late 1990s to a software vendor focused on the enterprise, said Jonathan Penn, vice president and principal analyst at Forrester Research Inc.

"Symantec was heavily dependent on its consumer business, but now it has branched out across almost every area of security," Penn said.

Along the way, Symantec landed a high-profile $13.5 billion deal to acquire storage software vendor Veritas. While some industry observers say Symantec paid too high a price for a storage vendor with little to do with security, others maintain that Thompson stuck to his belief of security as a core feature to infrastructure and network products.

"Thompson has had a long and distinguished career at Symantec and has been a thought leader in the security market," said Andrew Braunberg, enterprise software and security research director at CurrentAnalysis Inc. "I think that four years of trying to mesh cultures between Symantec and Veritas has probably worn him out, though. In the long run, his legacy, for better or worse, will be tied to that merger."

Among Symantec's other acquisitions was a deal for $370 million to buy antispam vendor Brightmail Inc. in 2004. It expanded into network security with a $100 million acquisition of network security vendor ON Technology Corp. and later with a deal for $200 million to acquire network management vendor BindView in 2006. Symantec has filled many other gaps in its portfolio with targeted acquisitions. Last year, Symantec acquired data loss prevention (DLP) vendor Vontu for $350 million and IT management software firm Altiris Inc. for $830 million. And the latest acquisition of MessageLabs, which it closed this week, gives Symantec the ability to offer Web security and instant messaging protection as a service.

Forrester's Penn said Symantec's diversified approach toward security has prepared it to withstand tighter IT budgets in a downtrodden economy. Symantec is poised to grow even bigger if it finds buying opportunities among small start-ups, Penn said. Now is the time smaller niche players may be pressured to sell.

"It's a good time to be a big player in the market," he said. "Symantec moved from a big name in small market to a very clearly leaving its name in a very big market and the whole time it managed to keep itself independent and keep focused. That's a pretty good measure of success."

There may be some delays in spending, but most companies will continue to be forced by compliance measures into investing in antispam, encryption and variety of security technologies, said Michael Osterman, principal analyst, Osterman Research. Symantec may have come into the hosted market a little late with its acquisition of MessageLabs, but overall it has strengthened itself despite market pressures, Osterman said.

"Symantec won't suffer as much, but there is going to be some fall out and reduced spending in some areas of security," he said.

Enrique Salem, 43, has been groomed for the CEO position, said Forrester's Penn. Salem will move Symantec into selling more products and services that simplify management, remove redundancies and automate security where possible, Penn said.

"[Salem] already put his fingerprints on Symantec with some of the organizational changes that have gone on to help foster greater communication across groups and break down some of the silos of products in its portfolio," Penn said.

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