Symantec Divests AdvisorSquare - Analyst Blog

By Zacks Equity Research,

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Symantec Corporation ( SYMC ) has recently grabbed the headlines with some positive developments. It is evident from the recent divesture of AdvisorSquare that Symantec is focusing on its core competencies. AdvisorSquare, which develops websites for financial services firms, has been taken over by Smarsh Inc., having a similar line of business.

Although the terms of the deal were not disclosed, AdvisorSquare will enhance the range of products Smarsh offers to financial services companies. Hence, we believe this is win-win situation for both Symantec and Smarsh Inc.

AdvisorSquare is a strategic fit with Smarsh's business model, as the latter offers compliance, e-mail and Web archiving, and website development services to the financial services industry. With this particular acquisition of AdvisorSquare and along with the Financial Visions Web design platform, Smarsh now has nearly 7,000 financial services websites in its domain.

Symantec is not only pursuing an acquisition/divesture strategy to grow its core business, but also conducting surveys to explore new business opportunities.

A recent survey by the company revealed that online file sharing is becoming popular among small and medium sized businesses (SMBs) as it reduces bottlenecks. However, this exposes the SMBs to greater Internet security risk.

Moreover, as SMB employees are increasingly adopting unmanaged, personal-use online file sharing solutions on their mobile devices, the line between work and play continues to fade, further raising security concerns.

This is another area where the company looks to focus in the days to come as this still remains untapped. At the recent CEO meeting, the management exuded confidence on the company's outlook. The company expects around 8% growth in total bookings, but we believe that there is significant competition in the SMB segment and Symantec must come out with new products and services if it is to grow in this environment.

Although the Internet security market is growing steadily and offers incremental growth opportunities, smaller companies like Kaspersky and Quick Heal that have resorted to aggressive pricing to sell their innovations poses a considerable challenge to the company.

Symantec offers a broad range of security and storage products to its end customers and also entered the mobile, cloud computing, and virtual environments business. Having said that, we must also add that large portions of the company's core business face significant growth challenges, including slowing PC growth, and making considerable effort to improve its SMB business.

This apart, the company competes in a market, which is mature and competitive. Moreover, stiff competition from McAfee (acquired by Intel Corp . ( INTC ) as well as the prevailing economic turmoil in Europe may weigh on the company's business prospects this year.

The company has a Zacks #3 Rank, implying a short-term Hold rating.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: INTC , SYMC

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