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​Can Blue Coat save struggling Symantec?

​Can Blue Coat save struggling Symantec?

Over the past three years, Symantec has endured many cost-cutting measures, including layoffs and infrastructure consolidation.

Over the past three years, Symantec has endured many cost-cutting measures, including layoffs and infrastructure consolidation.

The revolving CEO position, coupled with headcount consolidation, led to inconsistent strategies that negatively impacted the security vendor’s market performance.

In short, Symantec’s revenue has been in decline since 3Q14, and 2Q16 was no exception with the company’s revenue falling 3 percent year-to-year to $US884 million.

Meanwhile, Symantec’s enterprise security revenues, which contributed 54 percent of the vendor’s 2Q16 revenue, were approximately flat at -0.2 percent year-to-year, slightly better than expected in the vendor’s guidance as more customers adopted the company’s relatively new Advanced Threat Protection (ATP) solution.

Delving deeper, Symantec’s consumer security revenue declined six percent, despite the addition of new WiFi and home IoT security options to maintain its presence in the consumer security market.

Despite revenue declines however, recent cost cutting initiatives have resulted in the vendor’s operating profit rising 28 percent year-to-year to 12 percent of revenue.

“These initiatives, coupled with the addition of Blue Coat’s portfolio that will extend Symantec’s web and Cloud security offerings, will result in operating margin improvements later in 2016 and enable Symantec to re-emerge as a stronger pure-play security vendor by 2018,” Technology Business Research analyst, Jane Wright, said.

As reported by ARN, Symantec set its course on a new path with its August acquisition of Blue Coat for $US4.65 billion.

“The joining of Blue Coat and Symantec will solve many of Symantec’s existing portfolio and delivery problems,” Wright observed.

“It will also introduce new leadership that will bring more effective growth strategies to Symantec, as Greg Clark, CEO of Blue Coat, becomes Symantec’s new CEO and Michael Fey, Blue Coat’s president and COO, becomes Symantec’s new President and COO.”

While Symantec has many new technologies, such as its ATP suite, Wright said most of its offerings are based on traditional security technologies, and therefore, the majority of its revenue comes from more traditional solutions.

But Wright believes the addition of Blue Coat will expand Symantec’s portfolio with newer technologies in areas such as web security, analytics, and Cloud security including Cloud access security brokerage (CASB).

Further, many of Symantec’s current solutions are delivered through traditional methods such as on-premises software licences.

“Blue Coat brings newer delivery capabilities and more progressive solution packaging methods, such as security-as-a-service (SECaaS), which will enable Symantec to meet customer demand for more flexible security technology consumption,” Wright added.

“The addition of Blue Coat solutions and customer base will provide an immediate, albeit inorganic, revenue increase.”

During the coming year, Wright expects the two vendors to move quickly to rationalise and integrate portfolios and operations, and over time combine sales and channel resources to earn larger deals that include Symantec and Blue Coat technologies.

“Symantec’s updated portfolio and newer delivery methods will help Symantec generate strong organic growth and reemerge as one of the dominant vendors in security market by 2018,” Wright predicted.

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