Symantec Can't Break Spending Habit

The Altiris buy makes some strategic sense, since Symantec's rival McAfee (MFE) offers similar capabilities in its products.

But the acquisition doesn't answer the larger question of whether Symantec can afford to do this deal now.

The Cupertino, Calif.-based security and storage maker is struggling to meet expectations when it comes to earnings, and it has acknowledged that it faces execution issues in its different business divisions.

It's also trying hard to completely integrate its $13.5 billion purchase of storage company Veritas from 2005.

"I don't believe Symantec realized the benefits of the Veritas acquisition from an operating standpoint," says Cuggino. "As an investor, I am concerned about the stock performance, and so far the results aren't there."

Symantec stock has dropped nearly 30% since the Veritas acquisition was announced and the company continues to suffer because of integration glitches.

The weak performance of its data center management business, which largely comprises Veritas products, led Symantec to cut its profit and sales outlook for the fiscal third quarter on Jan. 16.

Symantec CEO John Thompson admits he had expected to see the Symantec-Veritas integration to be complete by now. "My sense though is that it will take a few more quarters to go through," he said last week.

Thompson says that despite Wall Street's doubts, he believes Veritas was a step in the right direction. "Scale matters and we need to have a broader portfolio, as those are going to make the difference for Symantec's success," he says. "But I agree our execution has been not as precise as it should be."

Wall Street analysts seem to agree that Symantec needs to work on its execution before buying more companies. "We believe the timing of this [Altiris] acquisition is not ideal," wrote Daniel Ives, an analyst with Friedman Billings Ramsey, in a report.

"We believe now is the time for Symantec to get its own house in order, not to start acquiring more technologies in tangential product areas," he wrote. Friedman Billings Ramsey makes a market in Symantec shares.

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