Symantec execs are mum on this latest in information security chinwag, but according to many industry pundits, the possible move of such a large public company going private would probably see the industry's merger-and-acquisition activity gather speed.
The thinking behind such a move for large players in all types of spaces isn't new, and often does result in buy-ups. Back in 2005, New York-based web advertising company DoubleClick went private after a couple of equity firms paid $8.50 a share to acquire the entire interest of the firm at about $1.1 billion. Then, this year, a seeming bidding war broke out between Microsoft and Google for the company, with Google eventually agreeing to buy DoubleClick for $3.1 billion in cash.
At the time of the private equity firms' buyout of the DoubleClick shares, analysts noted it was indicative of a larger trend of private investors looking to restructure and then, after a few years of improvement, sell businesses for profit or go public again.
Cashing out enough shareholders to de-register with the Securities and Exchange Commission also provides other benefits. As SunGard's President and CEO Cristóbal Conde put it back in 2005, before that company headed for its own private-equity buyout, Wall Street doesn't like it when quarterly numbers don't hit the mark — even if such inconsistency is due to legitimate business-related activities, like mergers and acquisitions or research and development efforts.
So, instead of focusing on quarter-to-quarter earnings and stock price, going private often enables companies to focus on long-term growth and strategy. Too, with regulatory requirements like Sarbanes-Oxley, going private can mean huge monetary savings.
Whatever Symantec's next move is, going private may not be a bad one. Its stock has been up and down, making it less the darling of Wall Street, really, since the Veritas acquisition. Plus, say some industry players, gaining a couple years without the burden of SOX compliance may allow company leaders to zero in on long-term planning and integration issues.
With its recently announced plans to buy back about 11 percent of outstanding shares, equaling about $2 billion — this, on top of re-purchases that started back in March 2005 — it will be interesting to see if the latest in industry chatter turns factual.
- Illena Armstrong is SC Magazine's U.S. editor-in-chief.