Symantec Corporation Business Information, Profile, and History
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History of Symantec Corporation
Symantec Corporation is one of the largest software companies in the world providing content and network security software to individual consumers and businesses. Its products are used in virus protection, intrusion detection, and remote management applications. The company also provides security assessment, consulting, and security management services. During 2005, Symantec completed its $11 billion acquisition of Veritas Software Corporation. Symantec operates facilities in 40 countries across the globe--nearly half of fiscal 2006 revenues was generated outside of the United States.
Symantec was founded in 1982 by 34-year-old Dr. Gary Hendrix, a prominent expert in natural language processing and artificial intelligence. He brought together a group of Stanford University researchers in the field of natural language processing to form the company, which had various ideas for innovative software, including a database program. The enterprise's initial funding was a National Science Foundation grant. When that grant ran out, Hendrix obtained financing from venture capital firms that were interested in investing in the field of artificial intelligence, even though the company in 1983 was still far from creating a product.
In 1984 Symantec was acquired by another, even smaller computer software start-up company, C&E Software, founded by Dennis Coleman and Gordon E. Eubanks, Jr., and headed by Eubanks. The merged company retained the name Symantec, and 38-year-old Eubanks became its chief executive officer. Eubanks, formerly a nuclear submarine commander, had studied computer engineering at the Naval Post-Graduate School in Monterey, California. For his master's thesis, Eubanks had developed an innovative microcomputer tool for the CPM operating system called EBASIC. At the time of the merger, C&E Software also was working on a database program, but the different fields of expertise of the two companies complemented each other. Whereas Symantec's founders were strong in high-technology innovation, C&E had more experience writing tight computer code and working out program bugs. The merger received significant support from venture capitalist John Doerr, who went on to become a member of the board of directors. Doerr was the first to see the potential in the merger and helped bring it about through his urging and financial backing.
Symantec shipped its first major product, Q&A for the IBM-compatible PC, in 1985. Q&A was a flat-file database program and was one of the few database management software packages for personal computers that used natural language query, based on an internal vocabulary of nearly 600 words. In order to obtain lists or statistics based on a data file, the user types in queries as ordinary English sentences instead of as arcane commands (hence the name Q&A for the process of question and answer). The use of natural language query in this product was a significant step in making computers more user-friendly. Symantec's sales for 1985 totaled $1.4 million.
Expansion Through Product Offerings and Acquisitions: 1985-89
Despite the modest success of Q&A, it soon became clear that the product would not be able to compete with the major personal computer database program on the market, Ashton-Tate's dBase, or Lotus Development Corp.'s spreadsheet program Lotus 1-2-3. Although innovative, Q&A managed to bring in only $8 million in sales in its first two years combined, which was far short of its expectations. Eubanks realized that the market had changed in such a way that Symantec could no longer be a one-product company relying solely on Q&A like other, established software companies, such as Ashton-Tate, Lotus Development, or WordPerfect Corp. Thus Symantec took the strategic move of broadening its product base, particularly in specialty niche software categories.
To take advantage of such software developments of other, smaller firms, Symantec formed its Turner Hall Publishing division to publish third-party software. In October 1985, Turner Hall introduced Note-It, a notation utility for Lotus 1-2-3. Of more significance, Eubanks decided that the company would expand its product offerings through acquisitions of other software companies. This involved not only obtaining a company's products but also retaining the company's programmers (in order to continue to develop new products in the given category) and its marketing staff (who had established client relationships).
At the same time, Eubanks decided to structure Symantec's organization into complete teams for each product. This involved establishing product groups consisting of all the functions of product development, quality assurance, marketing, documentation, and technical support. Subsequently, when other companies were acquired by Symantec, product autonomy was maintained. This way, employees of acquired companies who were accustomed to working in small companies were able to maintain a sense of the small company culture.
Symantec began its acquisition campaign in 1987. In January that year Symantec acquired Breakthrough Software, located in Novato, California. Breakthrough had developed Time Line, the leading project management program for the IBM-compatible PC. In July Symantec acquired Living Videotext, based in nearby Mountain View, California. Living Videotext was the developer of ThinkTank, a presentation graphics program for the Macintosh, and Grandview, an information management program for the PC. In September Symantec acquired Think Technologies of Bedford, Massachusetts. Think had developed THINK C and THINK Pascal, both programming language compilers for the Macintosh, and InBox, an electronic-mail system.
As a result of these acquisitions Symantec's sales doubled between 1987 and 1988, to reach $19.6 million. The number of employees likewise nearly doubled, to reach 180 in 1988, with 90 percent of the acquired companies' employees staying on. Direct sales representatives increased from 20 to 45. The portion of Symantec's sales to large corporations rose from 18 percent to about 35 percent in 1988. Symantec's existing products also benefited from the acquisitions through the ability to provide complementary software package combinations.
For a relatively small company, managing such acquisitions was not easy. Sales doubled, but Symantec suffered net losses due to the costs of the acquisitions. Although product management was kept separate, the acquired companies' finance, administration, personnel, and public relations functions all had to be merged. The restructuring was complicated by the loss of top managers. The founders of acquired companies Videotext and Think Technologies decided to leave Symantec. Of more significance, in 1988 Chief Financial Officer Michael Perez and Vice-President of Business Development Spencer Leyton both left the company. Eubanks proceeded to reorganize the company to reduce the number of top executives and give more authority to middle managers. These management and financial difficulties all contributed to the postponement of an initial public offering (IPO), which Symantec had originally planned for May 1988.
After six years of losses, Symantec finally became profitable in 1988, or fiscal year 1989 (ending March 31, 1989). On June 23, 1989, the company made its IPO. A stock split went into effect in September 1991. By November of that year the stock price was five times higher than it was when it went public, and it was selling at 64 times earnings. The high stock price supported Symantec's acquisitions, which were usually bought in exchange for Symantec stock.
Meanwhile, Q&A continued to be successful in its own smaller market of flat-file database programs. Flat-file databases, in contrast to relational database programs, require all the data to be in a single file. In fiscal 1989, Q&A accounted for one-third of Symantec's $50 million in revenues. In 1991 Q&A was the leader in the $60 million flat-file database market.
Acquisitions Continue in the Late 20th Century
Symantec made its biggest acquisition at the time in August 1990 when it purchased the highly successful Peter Norton Computing Inc. of Santa Monica, California. Norton Computing became a pioneer in DOS-based utilities software with its introduction of The Norton Utilities in 1982. This software package historically has been the market leader in PC utilities software. Utilities are programs that perform functions such as backing up and compressing files, checking for viruses, and restoring lost data. The acquisition gave Symantec a 34 percent share of the $410 million utilities market.
The purchase also helped Symantec, whose utility products were more heavily weighted toward the Macintosh platform, expand into the PC utilities market. Peter Norton, the founder and owner of the acquired company, was given one-third of Symantec's stock, worth about $60 million, and a seat on Symantec's board of directors. The acquired company became a division of Symantec and was renamed Peter Norton Computing Group. Most of Norton Computing's 115 employees were retained. The merger also helped Norton Computing regain the market share it was losing to competitors, especially Central Point Software. Norton Computing's revenues tripled between June 1990 and September 1991, and by November it appeared to have regained the market lead over Central Point. Norton Computing's merger with Symantec has since been cited as one of the most successful acquisitions in the software industry.
Symantec made three more acquisitions in 1991. In June it acquired Leonard Development Group, which had developed GreatWorks, an integrated applications program for the Macintosh. In August it acquired Zortech Inc., a developer of cross-platform C++ programming language compilers. Zortech had been the first company to introduce a C++ compiler for microcomputers. Symantec's acquisition of Zortech, with 32 employees for $10 million in stock, thus brought the company into the business of object-oriented programming and multiple platforms. Also in 1991 Symantec acquired Dynamic Microprocessor Associated Inc., which had developed pcANYWHERE, the leading remote control communications software product for personal computers.
Even during the recession of the early 1990s, which was especially severe in California, Symantec continued to grow. Revenues increased from $75 million in fiscal 1990 to more than $116 in fiscal 1991, and the number of its employees increased by 28 percent between June 1990 and June 1991.
Symantec also expanded in Europe. The company opened a European manufacturing facility outside Dublin, Ireland, in October 1991. The facility subsequently began supporting Symantec's customers outside North America. In May 1991, Symantec began selling Norton Utilities and certain other software packages in the Soviet Union through three official distributors. To combat rampant software piracy in Russia, Symantec also offered after-sale services and technical support to registered users. Taking a more active role in international distribution, Symantec acquired its exclusive distributor in the United Kingdom, Symantec U.K., in March 1992. By 1994 Symantec had a network of more than 150 partner companies worldwide and had produced more than 120 translated versions of various software products into different foreign languages.
Symantec moved toward becoming a significant provider of programming tools for corporate software developers when it acquired two more companies in June 1992 for a total of about $2.1 million. The acquired companies were Whitewater Group of Evanston, Illinois, a developer of object-oriented programming tools and a provider of a collection of graphics libraries, and MultiScope Inc. of Mountain View, California, a developer of innovative debugging programs for the DOS, Windows, and OS/2 platforms. In 1992 only 5 percent of Symantec's sales were in programming languages software, but Symantec hoped to expand its market by offering programming tools that could be used for multiple computer platforms.
In late 1992 Symantec officers were sued by rival software company Borland International Inc. over Symantec's hiring of former Borland vice-president Eugene Wang. Borland charged that Wang had passed on trade secrets via electronic mail to Symantec CEO Eubanks before leaving Borland. This was the first legal case in which a high-level executive had been implicated based on electronic-mail messages as evidence, and thus the case attracted a great deal of attention even outside the software industry. Eubanks and Wang were cleared of all charges in 1996.
The next major product category that Symantec pursued was business project management software. In the early 1990s this was seen as one of the fastest-growing software areas. Symantec introduced Guide Line, an easy-to-use project scheduling software, and provided improved versions of Time Line, a leading project management software package.
To expand in other areas of business software, Symantec made its largest acquisition since Norton Computing, purchasing Contact Software International Inc. for $47 million in exchange for 2.7 million in common shares. Contact Software, which had sales of about $20 million, was the maker of Act!, the leading contact management database program for executives and sales staffs.
The acquisition also boosted Symantec's sales, which had been flat for the first nine months of fiscal 1993. In addition, Symantec finally centralized the separate marketing activities of each of its four product groups at its Cupertino, California, headquarters in 1993 in order to be more efficient. Product development, though, remained autonomous.
Despite forays into different software categories, Symantec remained dedicated to utilities programs ever since gaining that market's leadership with the acquisition of Norton Computing. In 1992 utility programs accounted for about 65 percent of revenues, whereas applications programs, such as Q&A, accounted for only 30 percent. In October 1993 Symantec acquired Certus International Corp. of Cleveland, Ohio, which had developed antivirus and security software for the PC. In the fall of 1993, Symantec acquired Fifth Generation Systems Inc. of Baton Rouge, Louisiana, a developer of DiskLock, FastBack, Safe, and other software utilities for various platforms. Both companies, while remaining in their respective locations, were administratively merged into the Peter Norton Computing Group in Santa Monica, which in 1992 accounted for 75 percent of Symantec's revenues. Finally, in the spring of 1994, Symantec made a $60 million bid to acquire its leading competitor in utilities programs, Central Point Software of Beaverton, Oregon, whose 1993 revenues were estimated at $80 million. The two companies combined held 60 percent of the $440 million market for utilities software, but competition had forced prices and profits down.
Symantec's latest major strategic move was to broaden its product offerings to include software for client/server systems and local area networks. Despite its dominance in the field of software utilities, the market was shrinking as the leading supplier of PC operating system software, Microsoft, was increasingly combining utilities into later versions of its DOS operating system. Microsoft, however, was less dominant in the field of network software. Thus Symantec purchased the NetDistributor Pro product and other technology from Trik Inc. in 1993. To aid its product development technology, in January 1994 Symantec acquired the Rapid Enterprises division from DataEase International Inc., based in Shelton, Connecticut, for $7.5 million. Rapid Enterprises had been developing a fourth-generation software development tool for client/server applications. These tools helped Symantec to revise its existing software products so as to be able to run on enterprise-wide networks. Symantec began offering a line of network utilities in early 1994 and later combined them in a common management program, Norton Administrator for Networks. These programs permit central monitoring and execution of utilities functions on a number of computers over a network. Symantec also planned to redesign the product foundations for better integration when used over wide area networks, but its competition was tougher in this field.
Growth at the End of the 20th Century and Beyond
During 1997, Symantec filed suit against competitor McAfee Associates, claiming the company had used Symantec and Norton software codes in several of its programs. McAfee countered with a $1 billion defamation suit. The companies settled in 1999, but the terms were kept confidential. Meanwhile, Symantec forged ahead with its growth plans. In 1998, the company acquired Intel Corp.'s antivirus software division, including its licensed Intel systems management technology. Symantec also purchased IBM's antivirus business. Eubanks left the following year to head up a new enterprise software company. IBM executive John W. Thompson was named CEO and became the first African American to lead a major U.S.-based software company.
Thompson was immediately charged with the task of securing Symantec's position in the corporate network security industry. He sold the company's Internet Tools division and the Visual Café product line, as well as the ACT software line. He then orchestrated several acquisitions including the $975 million purchase of Axent Technologies, a producer of firewall technology; L-3 Network Security; and Seagate's Network Storage Management Group.
The company continued its growth-through-acquisition strategy throughout the early years of the new millennium. In fact, between February 2000 and February 2006, Symantec purchased more than 25 companies. Thompson's strategy appeared to pay off as revenues increased by nearly 30 percent in 2003 and 2004. By late 2004, the firm had set the stage for its largest acquisition to date and one of the largest software mergers at the time. In December, Symantec made a $13 billion play for Veritas Software Corp., the leading provider of information storage software. News of the merger sent Symantec share prices plummeting by 32 percent in just one week, a signal that the investment world did not think the pairing of the two companies was a good fit. At the same time, Microsoft Corporation announced plans to enter the antivirus and corporate security markets in the near future, making the software giant Symantec's largest competitor. Despite analyst and investor dissent, shareholders approved the Veritas acquisition in June 2005. By now, the value of the all-stock deal had fallen to just under $11 billion due to Symantec's faltering share price. One month later, Symantec and Veritas officially joined forces and formed the fourth largest software company in the world based on revenue.
Thompson's next big task was combining the two companies--a process that proved tricky at first. The company reported in November 2005 that it had overstated its revenue forecast for 2006 and by July 2006, its share price was at its lowest point in three years. With intense competition nipping at its heels, Symantec reorganized its sales force, invested heavily in marketing, and also revamped training procedures for employees and resellers. Only time would tell, however, if the Veritas purchase would pay off. Indeed, a July 2006 Wall Street Journal article reported, "Mr. Thompson concedes that making the combined company work may be the biggest challenge he has faced at Symantec, but he says he is moving aggressively and is confident he will succeed."
AXENT (EMEA) Ltd.; BindView Development Corporation; DataCenter Technologies N.V.; Delrina Corporation; Ejasent, Inc.; Invio Software, Inc.; Jareva Technologies, Inc.; Kvault Software Ltd.; Precise Software Solutions, Inc.; Sygate Technologies L.L.C.; Symantec (Australia) Pty. Ltd.; Symantec (Canada) Corporation; Symantec (Japan), Inc.; Symantec Australia Holding Pty. Ltd.; Symantec Cyprus Ltd.; Symantec Financing Ltd.; Symantec Holdings Ltd.; Symantec Information Technology (Beijing) Ltd.; Symantec International Ltd.; Symantec Israel Ltd.; Symantec Ltd.; Symantec Security Services Holding Ltd.; Symantec STDL Ltd.; Symantec Technology Services GmbH; Symantec UK (Limited); Symantec US Holdings L.L.C.; The Kernel Group Inc.; VERITAS Operating Corporation; VERITAS Software Corporation; VERITAS Software International Holding Ltd.; VERITAS Software (Beijing) Co., Ltd.; VERITAS Software Asia Pacific Trading PTE Ltd.; VERITAS Software Global L.L.C.; VERITAS Software GmbH; VERITAS Software India PVT. Ltd.; VERITAS Software Holdings Ltd.; VERITAS Software International Ltd.; VERITAS Software Investment Company; VERITAS Software Technology Corporation; W. Quinn, Inc.
CA Inc.; McAfee Inc.; Microsoft Corporation.
- Key Dates
- 1982 Dr. Gary Hendrix establishes Symantec.
- 1984 The company is acquired by C&E Software.
- 1985 Symantec ships its first major product--the Q&A database system for the IBM-compatible PC.
- 1987 Breakthrough Software, Living Videotext, and Think Technologies are acquired.
- 1989 Symantec goes public.
- 1990 Peter Norton Computing Inc. is purchased.
- 1993 Contact Software International Inc. is acquired.
- 1994 Symantec makes a $60 million bid to acquire its leading competitor in utilities programs, Central Point Software.
- 1999 John Thompson becomes the first African American to be named CEO of a major software company in the United States.
- 2005 Symantec acquires Veritas Software Corp.
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