One of the top cybersecurity companies on the NASDAQ is making a major sale. Symantec (NASDAQ: SYMC), which sells cybersecurity and antivirus products, announced they would be selling their enterprise security business for $10.7 billion to Broadcom (NASDAQ: AVGO). Symantec ended up jumping by over 10 percent in response to the announcement.
The deal is expected to close sometime in Broadcom’s fiscal first quarter, which begins in November. The $10.7 billion would be paid in cash from the company’s “new committed debt financing,” as Broadcom hopes that the purchase will end up paying for itself down the road.
At the same time, Broadcom reaffirmed their full-year revenue expectations of $22.5 billion, with $17.5 billion coming from chip sales while $5 billion would come from software. Buying Symantec’s enterprise security division would likely see the overall software sales rise substantially.
“M&A has played a central role in Broadcom’s growth strategy and this transaction represents the next logical step in our strategy following our acquisitions of Brocade and CA Technologies,” said Broadcom’s CEO Hock Tan. “Symantec’s enterprise security business is recognized as an established leader in the growing enterprise security space and has developed some of the world’s most powerful defense solutions that protect against today’s evolving threat landscape and secure data from endpoint to cloud. We look forward to expanding our footprint of mission critical infrastructure software within our core Global 2000 customer base.”
Minutes after the announcement, Symantec also reported their Q1 financial figures, with a net income of $26 million, or 4 cents per share, in comparison to the $60 million, or 10 cents per share, of overall losses. At the same time, Symantec also said it would be cutting its workforce by 7 percent as the company strives to cut down on its operational fat.
A survey of analysts covering the stock reveals that most experts have a “hold” rating on the company, waiting to see how the company develops in the coming months with these changes. There are a handful of “strong buys” but also a number of “underperform” ratings as well. The consensus 12-month price target for the company was $22 per share, with the stock jumping to $22.92 on Thursday.
Shares of Symantec jumped by 12.30 percent in response to the news. Over the past six-months, the stock hasn’t moved much, staying relatively the same in Q1 before seeing some 10 percent price swings both upwards and downwards in Q2.
Shares of Broadcom didn’t move much in response to the announcement as well, inching up only 0.34 percent. Time will tell whether this will be the start of a new beginning for the cybersecurity company that’s been having some trouble growing.
Symantec Company Profile
Symantec sells cybersecurity products and services to enterprises, small- to medium-size businesses, and governments. Solutions include protection for endpoints, email, networks, and cloud environments. Symantec’s Norton and LifeLock brands offer cybersecurity and identity protection solutions for individual consumers.
The company’s revenue is about evenly split between the two divisions, but consumer sales have yielded the majority of profits. The California-based company was founded in 1982, went public in 1989, and sells its solutions worldwide. – Warrior Trading News