In a sudden move, Symantec (SYMC) has terminated its CEO, Steve Bennett. And Wall Street is definitely concerned, as SYMC stock is off about 12% in today’s trading.
The company tried to calm things down with its press release, which said that the firing was “the result of an ongoing deliberative process and not precipitated by any event or impropriety.” Yet it seems there must be troubles brewing for SYMC stock.
Let’s face it, Steve Bennett was only at the helm for two years and only came up with his turnaround plan in January 2013. The company has also seen other top executives leave during the past couple months, including CFO James Beer and president of products, Francis deSouza.
If anything, the Symantec CEO position has been dicey over the years. Keep in mind that the board pushed out Enrique Salem just two years ago. And he only had the job for about three years.
As for now, the replacement for Steve Bennett will be Michael Brown, a board member and the former CEO of Quantum Corporation, who will hold the Symantec CEO position on an interim basis. SYMC will then begin a search for a permanent leader. However, the process could easily take months to complete. Again, this cannot be good for SYMC stock.
For example, the company faces intense competition. There is an onslaught of cutting-edge startups that are grabbing a bigger share of the security market. They are also taking advantage of the red-hot IPO market, as seen with the hugely successful deal of FireEye (FEYE).
SYMC stock has also suffered from the lack of a clear-cut mobile strategy. For the most part, the category is a rich target for security products. But SYMC’s efforts have been lackluster. Capitalizing on the void are scrappy startups like Lookout, which have raised substantial amounts of venture capital.
Yet the biggest challenge for SYMC stock is the secular decline the traditional PC business. Consider that a large amount of sales come from antivirus software and back-up systems for the desktop. The result is that growth has stalled. During the last nine months of 2013, net revenues fell by about 2%. Yes, that’s a grueling loss as the overall security market continues to show lots of momentum and remains a high priority for enterprises, especially in light of the high-profile breaches at companies like Target (TGT).
In other words, the new Symantec CEO will have a tough job ahead. And given the company’s track record, he or she will not have much time to show results for the turnaround. Unfortunately, this pressure may make things even tougher for SYMC stock as a new leader won’t have much leeway to try new things and focus on the long-term of the business.
In other words, maybe Steve Bennett should hope the Symantec CEO position remains an interim thing.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.