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Symantec’s Strategic Direction Presentation


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Symantec’s Strategic Direction Presentation

  1. 1. 1Symantec’s Strategic Direction and3Q 2013 Earnings PresentationJanuary 23, 2013
  2. 2. WelcomeHelyn CorcosVice President Investor Relations2
  3. 3. 32133Q FY13 Earnings HighlightStrategic Direction and Operational PlanQuestions & Answers
  4. 4. Forward Looking Statements4This presentation contains statements regarding our intention to execute a new strategy, implement operational andorganizational changes and our projected financial and business results, as well as our intention to return cash to shareholdersthrough dividends and continued share buyback activity, which may be considered forward‐looking within the meaning of theU.S. federal securities laws. These statements are subject to known and unknown risks, uncertainties and other factors that maycause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied inthis presentation. Such risk factors include those related to: maintaining customer and partner relationships; the anticipatedgrowth of certain market segments, particularly with regard to security and storage; the competitive environment in the softwareindustry; changes to operating systems and product strategy by vendors of operating systems; fluctuations in currency exchangerates; the timing and market acceptance of new product releases and upgrades; the successful development of new products andintegration of acquired businesses; and the degree to which these products and businesses gain market acceptance. Actualresults may differ materially from those contained in the forward‐looking statements in this presentation. Additional informationconcerning these and other risk factors is contained in the Risk Factors section of our Form 10‐K for the year ended March 30,2012 and in our Form 8-K filed on June 11, 2012.Any information regarding pre-release Symantec offerings, future updates or other planned modifications is subject to ongoingevaluation by Symantec and therefore subject to change. This information is provided without warranty of any kind, express orimplied. Customers who purchase Symantec offerings should make their purchase decision based upon features that arecurrently available.We assume no obligation to update any forward‐looking information contained in this presentation.
  5. 5. Use of GAAP and Non-GAAP Financial Information5Our results of operations have undergone significant changes due to a series of acquisitions, the impact of SFAS123(R), impairment charges and other corporate events. To help our readers understand our past financial performance and ourfuture results, we supplement the financial results that we provide in accordance with generally accepted accountingprinciples, or GAAP, with non‐GAAP financial measures. The method we use to produce non‐GAAP results is not computedaccording to GAAP and may differ from the methods used by other companies. Our non‐GAAP results are not meant to beconsidered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with ourconsolidated financial statements prepared in accordance with GAAP.Our management regularly uses our non‐GAAP financial measures internally to understand, manage and evaluate our businessand make operating decisions. These non‐GAAP measures are among the primary factors management uses in planning for andforecasting future periods. Investors are encouraged to review the reconciliation of our non‐GAAP financial measures to thecomparable GAAP results, which is attached to the financial review presentation, and which can also be found, along with otherfinancial information, on the investor relations page of our website at
  6. 6. 63Q13 Earnings HighlightsJames BeerEVP and Chief Financial Officer
  7. 7. Better than Expected Results for 3Q137• Revenue Drivers– Constant currency adjusted revenue grew 5% Y/Y– Organic, constant currency revenue grew 4% Y/Y– Strength in EMEA, Information Management and Trust Services– License, constant currency revenue grew 8% Y/Y driven by strength in Information Management solutions– Subscription, constant currency revenue grew 5% and maintenance revenue grew 5% Y/Y… Enterprise,constant currency subscription revenue grew 12%• Profitability Drivers– Operating margin and EPS driven by higher revenue and lower spending3Q’13 3Q’12As ReportedGrowth Y/YRevenue $1,791m $1,715m 4%Non-GAAP Operating Margin 25.6% 26.2% -60 bpNon-GAAP EPS $0.45 $0.42 7%
  8. 8. Solid Revenue Results by Segment83Q’13 3Q’12FX AdjustedGrowth Y/YConsumer $530m $525m 2%Security and Compliance $527m $510m 4%Storage and Server Management $666m $618m 9%Services $68m $62m 9%• Consumer… up-selling to premium suites and growing emerging backup, NortonLive services and mobile• Security and Compliance… strength in Trust Services, MSS and Encryption• Storage and Server Management– Information Management revenue grew 12% Y/Y driven by double digit growth in NetBackup– Storage Management revenue grew 1% Y/Y as customers continue to deploy more mission critical applicationson Linux and virtualized infrastructures• Services… driven by Business Critical Services
  9. 9. Strong Cash Generation93Q’13 3Q’12As ReportedGrowth Y/YCash From Operating Activities $463m $403m 15%Cash, Cash Equivalents and Short TermInvestments Balance$4,252m $2,380m 79%• 43% of cash on shore… ~ 26% excluding $1 billion allocated to maturity of June 2013convertible notes• $200m to repurchase 11m shares at average price $17.94… $283m remaining inthe current board authorized share repurchase plan
  10. 10. 10• ~73% or $1.26b of March quarter revenue coming from balance sheet• Guidance assumes– FX rate of $1.32 per Euro– 24.6% effective tax rate and 702m CSE… R&D tax credit drives down our tax rate in 4Q134Q FY13 Guidance4Q’13 Expected Y/Y GrowthFX AdjustedGrowth Y/YRevenue $1.70 to $1.74b 1 – 4% 1 – 3%GAAP EPS 18¢ to 19¢ - (75 – 76)% naNon-GAAP EPS 37¢ to 38¢ - 2.6 – 0% naDeferred Revenue $4.01 to $4.07b 1 – 2% 1 – 3%
  11. 11. 12Symantec 4.0 - StrategySteve BennettPresident and Chief Executive Officer
  12. 12. Symantec 4.0 Financial Theme13Organic growth focused companyComplemented by accretive acquisitions… that addvalue to customersGrowing operating margins and cash flowDisciplined approach to capital allocation
  13. 13. Strategy and Operating Plan Agenda14Learning JourneyCustomers and Market OverviewOffering StrategyGo-to-Market StrategyOrganizationResource AllocationFinancial View
  14. 14. 15Culver CitySpringfieldHeathrowDublinPuneChennaiChengduBeijingTokyoSydneyOver 8000 employees intown hall and small teammeetingsRosevilleLondonParisReadingBarcelonaSingaporeWashington DCNew YorkBaltimoreBostonMore than 1300 customers,including presenting atVISION Barcelona36 Analyst meetings across allregions, speaking to Gartner,IDC, Forrester and others78 financial analystsincluding attending CitiInvestor Conference251 partners at theBaltimore Partner ExchangeMeetings with various House and Senate members,including General Alexander and presenting to over 900attendees at the Symantec Government SymposiumMountain View
  15. 15. Key Learnings… Strengths16Strong AssetsDeep Expertiseand CapabilityPortfolio ofLeadingProductsStrong BrandsReach andInstalled Base
  16. 16. Key Learnings… Opportunities17Products andServicesGTM andGlobalStrategyPeople andOrganization
  17. 17. 18Evolution
  18. 18. 19A Revolution4.0
  19. 19. Market Trends, CompetitiveLandscape and Product Offerings20Stephen GillettCOOFrancis deSouzaPresident of Products & Services
  20. 20. Voice of the Customer21• Global economic uncertaintyand enterprise security• Full Emergence of Digital andSocial Media• Explosive data and intelligencegrowth• Enterprise IT will need to adaptand evolve
  21. 21. 22Enterprise Security• Redefined boundaries betweenconsumer and business• Enterprise attack sophisticationis increasing• Technology realm transfer• Dispersion of authority
  22. 22. 23Countries and Government• Governments are responsiblefor protecting their nationscritical infrastructure• Attacks on citizens andinstitutions increasing incomplexity• Cyber has become the fifthdomain for warfare — afterland, sea, air, and space
  23. 23. 24Changing Landscape and Market TrendsInternet of “Things” MobilityComputing EcosystemsDigital & Social Life
  24. 24. Changing Market Requires a New Model For Protection25Corporate NetworkData CenterPCs
  25. 25. 26SpecialistIntegratedStack ProvidersStartups
  26. 26. 27How We WinBest of NeedScaleIntegrationCross Platform
  27. 27. We Will Strengthen Our Offerings: More R&D28More R&DBetter andEasierCustomerExperienceRight-for-MeOfferingsNewOfferingsBetter meetcustomerneeds…fasterorganic growth
  28. 28. We Will Strengthen Our Offerings: More R&D29LeverageInnovationZero-basedmindsetEncryptionMoreInnovation• Whole company scope• Resource best growth opportunities• Eliminate redundancy• Increase R&D spend• Redeploy and hire• Advanced researchFile SystemDLPSecurity IntelligenceEndpointProtectionCenters ofExcellenceMore R&DBetter andEasierCustomerExperienceRight-for-MeOfferingsNewOfferingsBetter meetcustomerneeds…fasterorganic growth
  29. 29. We Will Strengthen Our Offerings: Better and EasierCustomer Experience30• Focus product teams on end-to-end customer use experience• Simplified licensing• Self-healing technologyTo Use, Upgradeand MaintainTo Get Help andSupport• Simplified support options• Expanded support channels ex.Web, chat, community support• Knowledge managementMore R&DBetter andEasierCustomerExperienceRight-for-MeOfferingsNewOfferingsBetter meetcustomerneeds…fasterorganic growth
  30. 30. We Will Strengthen Our Offerings: Right-For-Me Offerings31TailoredOfferingsChoice ofDeploymentOption• Consumers• Small Businesses• Large Enterprise• Governments• Software• Appliance• Cloud• Hybrids• Geographies• SpecificIndustries…verticalsMore R&DBetter andEasierCustomerExperienceRight-for-MeOfferingsNewOfferingsBetter meetcustomerneeds…fasterorganic growth
  31. 31. New Offerings Will Address Broader Customer Needs32• Integrated, modular, solving bigger jobs• Customer can buy existing products OR newintegrated offerings• Turn on new capability as neededMore R&DBetter andEasierCustomerExperienceRight-for-MeOfferingsNewOfferingsBetter meetcustomerneeds…fasterorganic growth
  32. 32. Symantec Addresses Unmet, Underserved Needs InThree Areas33Make it simple for me to be productive& protected at home and workKeep my business safe and compliantKeep my business information andapplications up and runningUser Productivity & ProtectionInformation SecurityInformation Management:Availability & Scalability
  33. 33. How Current Offerings Map to Customer JobsCurrent Offering ExamplesNorton 360Norton Mobile SecurityNorton Data ServicesEndpoint ProtectionEnterprise MobilityEndpoint EncryptionUser AuthenticationManaged Security ServicesData Loss PreventionMail and Web SecurityO3Control Compliance SuiteCritical System ProtectionTrust ServicesStorage Foundation HANetBackupEnterprise Vault/eDiscoveryBackup ExecBE.cloudFileStoreUser Productivity & ProtectionInformation SecurityInformation Management:Availability & Scalability34
  34. 34. We Will Deliver New Integrated, Modular OfferingsOver the Next 6-24 MonthsUser Productivity & ProtectionInformation SecurityInformation Management:Availability & Scalability35New Higher-Value OfferingsMobile Workforce ProductivityNorton ProtectionNorton CloudInformation Security ServiceIdentity/Content-awareSecurity GatewayData Center SecurityBusiness ContinuityIntegrated BackupCloud-based Info ManagementObject Storage Platform
  35. 35. Enables authorized users to access corporate resources from any corporate orpersonal mobile device, PC or Mac while protecting data, applications,devices and identities36New Higher-Value Offering: Mobile Workforce ProductivityEmployee Owned/BYODCorporate OwnedEnterprise ApplicationsCloud Services• Endpoint protection• Corporate• Personal• Mobile device management• Mobile container• Mobile applicationManagement• Enterprise app store• Endpoint encryption• Endpoint DLP• User authenticationIntegratedSolves an important customer problem and builds competitive advantage
  36. 36. 37Provides visibility into, and comprehensive protection from, advancedthreats leveraging Symantec and 3rd-party productsNew Higher-Value Offering: Information Security ServiceEnterprise AppsSymantec Security Offerings3rd-Party Products and ToolsSymantec Global SecurityIntelligence Network• Analysis• Correlation• Visibility• Dashboard• Threat Detection• Prioritization andWorkflow• Incident Management• Risk ManagementIntegratedSolves an important customer problem and builds competitive advantage
  37. 37. 38New Higher-Value Offering: Business ContinuityApplicationsPlatformsStorage• Windows Backup• Unix/Linux Backup• Virtual Backup• Clustering• Virtual HA• Replication• Disaster Recovery• Service OrchestrationIntegratedSolves an important customer problem and builds competitive advantageDelivers high availability, performance, and scalability for businessapplications in virtual, private cloud environments
  38. 38. Examples of New or Expanded Centers of Excellence39Cloud Platform &CapabilitiesHardwareSupply ChainInformation FabricGlobal SecurityIntelligenceNetwork
  39. 39. Solve BiggerProblemsBetter andEasierRight-for-MeOfferingsHow ThisBenefitsCustomersHow TheyWant to Buy40
  40. 40. • Evaluated entire portfolio• Two key criteria– Stand-alone offering or part of alarger, modular future offering– Asset to solve new, importantcustomer problems?41Symantec 4.0 Portfolio Strategy• Portfolio review continues overtime• Will deal with anything thatdoesn’t fitNothing to announce today
  41. 41. 42Applied “Right for GEO” mannerCustomer SegmentCommercialGlobalConsumer andSmall BusinessEnterprise• Global & Enterprise… Symantec direct + Customer led channelinvolvement• New Verticals business… Telco/ISPs, SIs, XaaS, National Public Sector• Channel-led… dedicated Symantec team supports• Combination of direct through e-business and channel-ledSimplified Go-to-Market (GTM) Strategy
  42. 42. 43• Expanded high quality/lower cost models- Telesales- e-Business- In product• New business growth- Field paid only on new over time- Separate renewals org• New global sales and partnerenablement organizationNew Marketing and Sales Capabilities• New, enhanced partner program- More selective based on capabilities- Better enablement & Symantec support- New performance-based incentives• Expanded Marketing- Total customer experience- New centers of excellence- Strategic Pricing & LicensingOfferings CustomersBeyondCurrentPointProducts toIntegratedOfferingsBeyondShort-TermBookings toLastingCustomerValue
  43. 43. Organizational Strategy44July 25th to Present• Common company level objectives• Financial results + customers + partners +employees• New staff performance objectives• Changed staff meeting cycle• Trained 95% of directors and VPs on SYMC4.0 leadershipToday• Symantec 4.0 strategy and plan• New org structure and leadership team• New organization simplification initiative• Splitting Chairman and CEO roles
  44. 44. New Organization Design: Objectives45Improve Teamwork Increase Customer Focus Functionalize Upgrade Growth Capability• Office of the CEO• Senior leadershipdecision on talent +collaboration skills• Consumer & businessworld merging• Customer jobs vs.segments• Break up BU structurethat created silos• Global in thinking andactions… GEO leaders• Upgrade processcapability• Consolidation forleverage– Centers of excellence– Eliminate redundancies• Right talent… Fewer,bigger roles for ourbest and brightest• Marketing• Sales processmanagement• IT• Cloud Ops• HRStrengthen leadership… Improve Organic Growth Capabilities…Minimize Execution Risk
  45. 45. Creation of the Office of the CEO46New Roles orMajor ChangesOffice of the CEO• COO• President Products & Services• CFO46
  46. 46. New Structure 11 Direct Reports to the CEO47New Roles orMajor ChangesProduct &ServicesCOO Verticals BusinessStrategic SalesNA EnterpriseSalesEMEAAPJCFO HR LegalStrategy & CorpDevCEO47
  47. 47. President of Products and Services OrganizationCEONew Roles orMajor ChangesProductsMobileInformationSecurityInformationManagementCTOBusiness CriticalServicesEnterprise & NortonEndpoint PDEducationEnterprise & NortonEndpoint PMGlobal/VerticalOffering Integration48
  48. 48. 49COO OrganizationCEOCOOConsumer SalesRenewalse-BusinessCIOCloud OpsCMOSales Process &EnablementCustomer CareCommunicationsNew Roles orMajor Changes
  49. 49. 50Operational PlanJames BeerChief Financial Officer
  50. 50. Opportunities to Drive Efficiency & Redeploy Resources51Company-wide OpportunitiesDroveDuplication andComplexityPartially integrated acquisitionsSiloed organization; redundancyToo much management
  51. 51. Opportunities to Drive Efficiency & Redeploy Resources52Product Development2 Significant duplication today… 24 cloud service platforms and 54 data center locations1 Consolidated $1.8 billion spending pool3 Align point product spending with market opportunity
  52. 52. Opportunities to Drive Efficiency & Redeploy Resources53Sales & Marketing1 Simplify pricing & licensing … 31 price lists and 41 license meters5 Field sales real estate consolidation34 Streamline route to market structure … 23 distinct sales channels6 Fewer individualized compensation plans2 Build high performance and cost effective renewals teamConsolidate worldwide marketing spend
  53. 53. Opportunities to Drive Efficiency & Redeploy ResourcesCross-company54Management ranks have expanded steadily• High cost• Slow decision making, removed from front line realityOrganization Simplification Initiative• Move from 10 layers of management to 6-7• Move from average of 4 spans to ~812
  54. 54. Existing offeringsNew integrated offeringsProduct delivery capabilities• Cloud infrastructure platform• Hardware Supply Chain• Information Fabric• Global security intelligencenetworkIT a strategic enabler• Insource some activity• Applications and infrastructureHR… building talent andorganizational capabilityProcess capabilityMarketing• Pricing resources• Customer analytics• Brand buildingSales• Process improvements• Renewals team• e-Business expansion55Investments to Build Organic Growth EngineProduct DevelopmentGeneral &AdministrativeSales & MarketingPeople InfrastructureProducts
  55. 55. FY12A FY17E Median HighR&D 14% 16% 13% 17%S&M 41% 27% 28% 50%G&A 6% 5% 8% 13%56Expense to Revenue RatiosBenchmark1Invest to drive faster organic growthSymantec1Benchmark includes 3 year averages for BMC, CA, CVLT, CRM, ORCL, MSFT, SAP, INTU, CTXS, ADBE
  56. 56. Commitment to 5%+ organic revenue growth and 30%+ operating margins• Organic revenue… 5%+ CAGR FY15-17• Operating margins… 30% goal in FY15Financial Plan57FY14 - A Transition Year… Expect• 0-2% revenue growth• Operating margins grow 200 bps• Free cash flow impacted by• ~$275 million severance payments• Incremental CapEx $100-$150 million
  57. 57. Capital Allocation58• CapEx and acquisitions that support strategy + meet IRR hurdles• Return excess cash to shareholders• 15%+ IRR hurdle• Target returning 50% of free cash flow longer-term• Over time, ~50/50 balance between dividends and repurchasesStrategyStrategyElements
  58. 58. Capital Allocation59• Initiating dividend with targeted yield of 2.5% in 1Q14• New $1B share repurchase authorization• Continue opportunistic buybacks• Expect to return $800m• Will invest $375-425m for severance and CapEx investmentsAnnouncingTodayFY14
  59. 59. 60Symantec 4.0 Operating Theme… Better and EasierHow we play… As a Team… Making High Quality, Timely Decisions• Symantec-wide objectives and performance metrics• One Symantec strategy with cascading organizational strategies and operational priorities• Individual accountability… to their role and the teamWhat we do… People and Partnerships… Internal and external… creating customer valueHow we think… Innovation + Execution…. Global and Local… Big and Small• Innovation everywhere with special focus on customer driven and technology innovation• Excellence in execution through people, process and technology• Act big where there is value… act small everywhere else• Eliminate complexity not valued by customers or partners• Create and leverage global centers of excellenceHow we organize… Simplified and Streamlined• Inverted triangle organizational philosophy• Lean and effective management structure• Culture of learning and sharing to make us better
  60. 60. Symantec 4.0 Company Theme61Enabling people, businesses andcountries… to protect and managetheir digital information… so theycan focus their time and energyachieving their aspirations
  61. 61. 62Q&A