How Symantec scuppered Veritas sell-off six ways to Sunday
Organizational changes wrecked last quarter's results
A champagne bottle's crack, a splash, and cheers rang out as the good ship Veritas was launched on the banks of Symantec's river – sent off to steam the data storage seas own with a new owner: the Carlyle Group.
It's had an inauspicious launch: Symantec had to cut the price tag for Veritas by $800m due to "uncertainties" and a "difficult environment."
A Symantec 8-K SEC filing [RTF] makes a disclosure about Veritas' preliminary operating results for the latest quarter, ended Jan 1, 2016, and explains them in gory, brown-stuff-hitting-the-fan detail. It states:
We currently expect a year-over-year decline in our results of operations for the three-month period ended January 1, 2016. We believe that this decline is principally being driven by the following factors:
- Issues related to our transition to a dedicated sales force and management team independent from Symantec.
- Issues related to the transition to our new ERP system and adjustments to associated business processes.
- To a lesser extent, competitive pressures and general reduction in demand in our industry.
This Symantec Veritas document says: "In April 2015, we initiated our transition to a dedicated sales force and sales management team independent from Symantec. This transition had a negative impact on our results of operations during the three-month period ended January 1, 2016, a portion of which represents lost business opportunities."
The company screwed up its sales management and organization. It made "significant changes to the roles of several key sales management executives. Certain of these changes did not generate the intended results, and we believe they had a negative impact on our sales activities during the three-month period ended January 1, 2016."
"For example, the head of sales for our largest sales region, typically representing approximately half of our sales, was promoted to that position in April 2015 and subsequently replaced in January 2016."
"In addition, we also made significant changes in both territory and account assignments throughout the sales organization as part of the sales force and sales management transition. As a result of this sales force realignment, we currently have gaps in the coverage of certain territories by our sales personnel."
It's hiring additional sales and leadership staff, but there "can be no assurance that we will be able to hire key personnel to fill all of these roles in a timely manner or that such new hires will succeed in those roles. Additionally, once hired, it generally takes a period of time before newly hired sales personnel are fully trained and able to effectively generate business."
In addition, the Veritas Information Availability products "have one of the longest and most complex sales cycles among our product offerings and, as a result, our transition to a dedicated sales force and sales management team had a greater impact on sales of these products than certain of our other products in the three-month period ended January 1, 2016."
It couldn't get worse, could it? Yes it could.
"Lastly, implementation of, and transition to, our new ERP system required our sales force to devote significant time to learn to use our new ERP system and conduct customer and partner training initiatives to enable them to use our new ERP system. As a result, our sales force spent less time selling to our existing and potential new customers during the three-month period ended January 1, 2016, which we believe had a negative impact on our sales force's ability to generate sales during such period."
The document adds:
The transition to this new system resulted in a delay in generation of renewal quotes, which reduced the time available to obtain renewal orders during the three-month period ended January 1, 2016. As a result, our results were negatively impacted during such period. We expect that a portion of these anticipated renewal orders will instead be received during the three-month period ended April 1, 2016.
And then, to ice this already disastrous cake: "We initially experienced a higher than normal rate of rejections and cancellations of new and renewal orders, primarily due to some of our customers and partners failing to correctly input the order submission data required to successfully book orders. As a result, we experienced delays in processing orders during the three-month period ended January 1, 2016."
And, "we believe these delays in quoting and processing orders may have resulted in a permanent loss of some revenue, in particular from our BackupExec products due to the lower switching costs associated with such products."
Wow, sextuple oops.
You, Symantec management, win the Grand Sextuple Oops prize for a really thorough screwing-up of Veritas' final quarter under your management. Magnificent performance. First rate. Absolutely exquisitely brown, slimy and sticky stuff stuck to your fan.
Then, to make the new Veritas management feel even better: "Certain of our competitors have been aggressive on pricing within the markets in which we compete. We expect this pricing pressure within our industry to continue during the three-month period ended April 1, 2016. In addition, certain market segments in which we participate have recently experienced some decline in demand, which may have impacted our results for the three-month period ended January 1, 2016."
Enjoy running your new ship boys.
Veritas' net revenues for the final 2015 quarter are expected to be between $550 million and $580 million as compared to $668 million recorded a year ago, an 18.2 per cent fall at the mid-point.
Veritas management put out a release saying it was now independent from Symantec.
CEO Bill Coleman said: "We're in a unique position as the company that manages and protects the world's information, and I am honored to become part of the Veritas family to serve our customers and partners."
We're told that board is led by Chairman Bill Krause, formerly President and CEO of 3Com, and David Scott, former chairman and CEO of 3PAR who was until recently SVP and general manager of the global HP storage business. Welcome back David. You're needed, because Veritas right now is sub-par and needs a hefty kick up the rump. ®