Starboard Seeks Five Board Seats at Symantec -- Update
August 16 2018 - 8:49AM
Dow Jones News
By Cara Lombardo
Symantec Corp., which makes antivirus software that alerts
millions of people to risks lurking on their computers, is now
facing a potential threat of its own.
Activist investor Starboard Value LP has taken a position in the
cybersecurity company and privately nominated five directors to its
11-person board in July, the hedge fund said Thursday in a
securities filing.
The Wall Street Journal reported earlier Starboard had taken a
stake in Symantec and made the nominations, citing people familiar
with the matter.
The hedge fund helmed by Jeff Smith beneficially owns about 5.8%
of Symantec, making its stake worth about $670 million, the filing
said. Starboard thinks Symantec, shares of which have plunged 34%
this year, needs operational changes to improve margins, especially
in its business-facing segment, the people said.
Symantec on Thursday confirmed receipt of the nominations,
adding that it maintains open communications with its
stockholders.
"Over the last several weeks, we have had a dialogue with
Starboard and we plan to continue these discussions," Symantec
said.
Shares of Symantec rose 6.5% to $19.75 in premarket trading.
The Silicon Valley company's market value has dropped to around
$11.5 billion from as much as $21 billion about a year ago,
according to S&P Global Market Intelligence. The biggest
one-day stock price drop over that period, 33%, came May 11, a day
after the company announced its board was conducting an internal
audit on unspecified financial issues raised by a whistleblower.
The company has since said it doesn't expect a material adverse
impact on past financial statements.
Symantec said Thursday it will file its financial statements
with the Securities and Exchange Commission once its internal
investigation is completed and an independent public accounting
firm reviews the documents.
Starboard believes its board nominees could help remediate any
financial-reporting issues and improve operations, much like it
recently did at Marvell Technology Group Ltd. Its proposed slate
includes Dale Fuller, a former chairman of antivirus company AVG
Technologies, former Intuit Inc. executive Nora Denzel and three
people it put on Marvell's board, including Starboard research head
Peter Feld.
Symantec also warned this month it isn't closing as many deals
as expected in its enterprise security unit, which sells to
businesses and makes up about 60% of its revenue. Its consumer
unit, whose brands include Norton and LifeLock, is faring better.
Chief Executive Gregory Clark said at the time that the company is
focused on underperforming areas and has invested in its sales
operations.
Symantec spent about $7 billion in recent years on two
high-profile acquisitions -- cloud-security company Blue Coat and
identity-theft-protection company LifeLock -- that were met with
enthusiasm from investors. But those deals have done little to
jump-start growth at Symantec, which Starboard believes lags its
peers despite it being one of the largest cybersecurity companies,
the people said.
Starboard, a New York hedge fund best known for replacing the
entire board at the parent company of Olive Garden in 2014, has
taken stakes in several other technology and software
companies.
Symantec has attracted attention from activists before.
Heavyweight Elliott Management Corp. was one of its largest
shareholders in 2016 and applauded when private-equity firm Silver
Lake made a $500 million investment in a bid to boost the company's
flagging stock. Silver Lake doubled down its investment at the time
of the Blue Coat deal. Fellow private-equity firm Bain Capital has
also invested in Symantec, and both Bain and Silver Lake have
representation on Symantec's board.
--Robert McMillan and Kimberly Chin contributed to this
article.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
August 16, 2018 08:34 ET (12:34 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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