Symantec Sees Consumer Promise in LifeLock Deal
November 21 2016 - 04:50PM
Dow Jones News
With its $2.3 billion acquisition of
identity-protection-services seller LifeLock Inc., Symantec Corp.
is looking to breathe new life into its consumer-product line,
which has long been defined by Norton antivirus products.
Symantec said it would keep both brands and integrate LifeLock
with Norton's offerings into a single product line after the
acquisition closes, expected early next year. The goal is to give
consumers a one-stop shop for identity-theft and
computer-protection products.
"We did a lot of work on assessing the many millions of Norton
customers and their affinity with LifeLock," said Greg Clark,
Symantec's chief executive. "We feel really good about our ability
to go into the very large Norton customer base and cross-sell them
identity protection."
The combined LifeLock and Norton product lines represent $2.3
billion in annual revenue, and Mr. Clark believes the acquisition
will reverse recent revenue declines. Although spending on computer
security is on the upswing, Symantec, the world's largest
security-software company by revenue, has struggled. In the fiscal
year ended April 1, revenue fell 9% from a year earlier.
At LifeLock, meanwhile, revenue rose 14.5% through the first
nine months of the year. LifeLock has more than 4.4 million
subscribers for services starting at $10 a month. Its growth has
come partly through aggressive marketing. Last year, LifeLock
agreed to pay $113 million to settle deceptive-advertising charges
brought by the Federal Trade Commission. LifeLock neither confirmed
nor denied the FTC allegations.
Symantec expects to see single-digit percentage growth in its
consumer business after the acquisition closes in early 2017. The
company wants to build new products that leverage LifeLock's data
analytics to identify emerging cyberthreats, said Symantec's Mr.
Clark.
The cash deal will value LifeLock at $24 a share, a 16% premium
to its Friday price of $20.75, near its 52-week high. Shares of
Symantec rose 3.2% Monday afternoon.
Like other makers of antivirus software, Symantec has struggled
to come up with hit products in recent years and has been hurt by
the global slowdown in PC sales, the rise of free antivirus
products, and the move to mobile devices.
Former Chief Executive Michael Brown stepped down in April
following disappointing financial results. Two months later, the
company said it would acquire Blue Coat Systems Inc. in a $4.65
billion deal, the company's largest acquisition since its 2005
purchase of Veritas Software. Mr. Clark, who had been CEO of Blue
Coat, joined Symantec as part of the deal.
In January, Symantec sold its Veritas data-storage unit to
Carlyle Group for $7.4 billion.
"Symantec's strategy is to retreat to the high end of the
market," said Peter Firstbrook, an analyst with Gartner Inc.,
adding that the deal "makes some sense from that perspective."
However, he warned that Symantec is paying dearly for a company
that may not continue to deliver growth. LifeLock's core business
of monitoring consumers' identity "is relatively flat and seems to
be fully penetrated," he said in an email.
A Symantec spokesman said the company disagrees with Mr.
Firstbrook's assessment
Write to Robert McMillan at Robert.Mcmillan@wsj.com
(END) Dow Jones Newswires
November 21, 2016 16:35 ET (21:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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