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Symantec to sell Veritas for $8 billion to focus on security software - IceWizard - 08-11-2015
Tue Aug 11, 2015 11:59am EDT
By Abhirup Roy and Lehar Maan
(Reuters) -
Norton antivirus software maker Symantec Corp (SYMC.O) has agreed to sell its data storage unit, Veritas, for $8 billion to a group led by Carlyle Group LP (CG.O) as it seeks cash to turn around its core security software business.
The deal, the biggest U.S. leveraged buyout this year, will give Symantec much-needed cash to compete better in the fast-growing cybersecurity market.
Symantec's shares, however, fell as much as 5
percent on Tuesday as investors focused on the company's weak earnings and forecast. Symantec has been facing headwinds in its
security software business as weak PC sales
hurt demand for its products, which come
bundled with computers.
"Now they really get a new lease on life in terms of focusing on their core security DNA as the Veritas storage piece has been a massive black cloud on the Symantec story for a decade," FBR Capital Markets analyst Daniel Ives said on Tuesday.
Symantec, which bought for $13.5 billion in 2005, said it expected about $6.3 billion in net cash proceeds from the sale.
Reuters reported earlier on Tuesday that
Symantec would sell Veritas to Carlyle. Revenue from Symantec's consumer security
business fell 19 percent in the first quarter, while revenue from its enterprise security business dropped 13 percent.
Revenue from Veritas, which accounts for nearly 40 percent of Symantec's total revenue, fell 10 percent.
The company also forecast current-quarter profit and revenue below analysts' expectations. Symantec forecast an adjusted profit of 40-43 cents per share and revenue of $1.49 billion-$1.53 billion for the second quarter.
Analysts on average were expecting earnings of 45 cents per share and revenue of $1.54 billion, according to Thomson Reuters I/B/E/S.
Symantec's net income halved to $117 million, or 17 cents per share, in the quarter ended July 3.
Excluding items, the company earned 40 cents
per share, below the average analyst estimate
of 43 cents. Revenue fell 13.6 percent to $1.5 billion, missing analysts' expectations of $1.53 billion.
Symantec also raised its buyback program by
$1.5 billion to $2.6 billion. The company said the Veritas sale is expected to close by Jan. 1.
The buyer group includes Singapore's sovereign wealth fund GIC.
Symantec shares were down 4 percent at
$21.99 in late morning trading. Up to Monday's
close, the stock had fallen about 7 percent in the past 12 months.
(Editing by Kirti Pandey)