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TheStreet Open House

Symantec Shares Spike on Split Chatter

Symantec's response has been added to this story.

CUPERTINO, Calif. ( TheStreet) -- Shares of software giant Symantec (SYMC) rose sharply on Friday as breakup chatter swirled around the company.

The software maker's stock was up more than 4% shortly after market open as investors reacted to a New York Post story saying that activist shareholders may pressure the firm to split up. Citing an unnamed source, the Post reports that activists have been speaking to possible suitors and other large shareholders.

Symantec

A Symantec spokeswoman told TheStreet that the software maker does not comment on rumors or speculation.

There is speculation that a split would separate the company's security and storage businesses. The software specialist has struggled with execution issues, particularly following its $13.5 billion acquisition of storage management firm Veritas in 2005.

The firm's recent second-quarter results, however, suggested that Symantec is starting to turn things round. Coming off a disappointing first quarter, the company noted strength in both its enterprise and government businesses and gave healthy guidance for its fiscal third quarter.

Daniel Ives, an analyst at FBR Capital Markets, believes that Symantec will fight tooth and nail to avoid any break up. "While we believe a 'split up' of the company's security/storage business makes sense on paper, could unlock value, and would be applauded by many investors, this will be a battle royale," he explained in a note on Friday. Symantec, he added, takes a "strong-willed" approach towards selling a broad suite of products.

Ives, who rates Symantec market outperform, said that he will be closely monitoring developments at the company over the coming weeks and months. "Any shareholder activism in shares of Symantec would clearly impact the perception of this name with investors," he wrote.

Potential upheaval at Symantec could also present a competitive opportunity to rivals such as Microsoft (MSFT) and security firm McAfee (MFE), which is set to become part of chip giant Intel (INTC).

--Written by James Rogers in New York.

>To follow the writer on Twitter, go to http://twitter.com/jamesjrogers.

>To submit a news tip, send an email to: tips@thestreet.com Symantec's (SYMC) turnaround is off to a strong start, but investors should not get carried away.

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