Broadcom + Symantec: Great for wall street, not for security

August 8, 2019, was a great day on Wall Street, as Broadcom announced their intent to acquire Symantec’s enterprise business for $10.7 billion in cash. Symantec’s stock moved up more than 12 percent on the expected announcement. This jump might not seem like a huge premium, but given that Symantec’s revenue was in decline during its prior fiscal year in one of the hottest technology segments, we think the price tag was generous. Broadcom’s own statements reinforce the financial benefits:

• $1 billion in operating expense reduction, affecting sales, marketing, and G&A
• Focus on selling to the largest Global 2000 customers, leveraging an enterprise licensing model

The financial benefits to the combined companies are clear. However, it’s hard to find much in terms of product or technology synergies that provide a clear path to better security products for customers.

‍Is this news good for Symantec’s customers?

‍Post-acquisition, Broadcom is still largely a semiconductor company. It did acquire CA Technologies in 2018 to expand into software, but CA’s strengths are software for mainframes, development, and testing—not security. With Symantec, Broadcom has become the Cerberus of technology, a monster with three heads attached to the same body. All three heads have a mind of their own, and they will have to be careful not to eat each other.

As with any financially driven acquisition, Symantec’s post-acquisition focus may not be on developing market-leading products or breakthrough innovations but on delivering $1+ billion in incremental EBITDA to Broadcom. This could come from a push to cross-sell opportunities. If they follow the same playbook as they did with CA, you could also see another “bloodbath” as they reduce staff.  Unless Symantec’s customers need more silicon or mainframe software, it’s hard to see much upside.

‍What should customers do? ‍

The negative impact of Broadcom’s acquisition may result in fewer products, less innovation, and decreased support for Symantec’s customers. Customers must not wait passively to feel the impacts, but instead should proactively consider alternative vendors and solutions to fill whatever gaps surface as Broadcom strives to deliver the $1+ billion in annual savings they promised to Wall Street. The worst thing an enterprise can do is to wait until the last minute and be forced to make a change.

If you decide that you’re ready to move away from Symantec, you’re not alone. In response to the acquisition news, enterprises have reached out to us to discuss how they could transition away from Symantec to a vendor who is still committed to innovation, not cross selling. The Menlo Security Cloud Platform is used by seven of the ten largest banks in the world by assets in the countries where we sell, as well as the U.S. Department of Defense. They selected Menlo Security because we provide one of the most secure cloud platforms in the industry, providing 100 percent protection against web and phishing malware since our founding.