Symantec Gains Ahead of Investor Call to Address Investigation
(Bloomberg) -- Symantec Corp. shares rose after the cybersecurity company said it would hold an investor call Monday to provide more information about an internal investigation announced last week.
Tucked into the quarterly earnings report last Thursday, Symantec disclosed a probe that will delay the filing of its annual report and could potentially lead to a restatement of earnings. The company didn’t take any questions during the post-earnings call and canceled scheduled call-backs with analysts. The paucity of information left investors guessing, and many imagined the worst.
Symantec said Monday that Chief Executive Officer Greg Clark and Chief Financial Officer Nick Noviello will answer questions about the company’s financial results and outlook in a call at 4:30 p.m. New York time. The shares rose as much as 12 percent, their biggest intraday gain in almost six years, to $21.81 in New York after plunging 33 percent on Friday.
All Symantec would say last week is that the board’s audit committee is looking into “concerns raised by a former employee.” The board has retained outside counsel and alerted the U.S. Securities and Exchange Commission.
In recent years, the Mountain View, California-based company has focused more on chasing enterprise business to offset a decline in demand for its Norton antivirus software for PCs. The purchase of Blue Coat Systems in 2016 for $4.65 billion was a step in that direction.
That also brought in almost all of Blue Coat’s senior executives, including the CEO, chief operating officer, chief financial officer, chief strategy officer, chief technology officer and head of worldwide sales. Symantec hasn’t identified the former employee who lodged the complaint that prompted the investigation, but management turnover over the past two years suggests there are plenty of senior people with vast knowledge of the business who could have complained.
Carson Block, chief investment officer of Muddy Waters Capital, wrote in Forbes Sunday that the acquisition could be one of the issues behind the investigation. Block said it “seems rare” for a large public company to swap its management team for one of a newly acquired private company. The move could have “set up an ‘us’ versus ‘them’ war in the ranks,” Block wrote. “Such a highly politicized environment can create a toxic culture that leads to mistakes, cover ups, and outright wrongdoing.”
Block also said Blue Coat’s prior ownership by Bain Capital could also have led to issues.
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