This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Symantec CEO Ouster Shocks Wall Street

NEW YORK (TheStreet) -- After less than two years at Symantec's (SYMC) helm, the software maker terminated CEO Steve Bennett on Thursday, a shock move that has sent its shares spiraling.

Analysts were surprised by the decision, warning it bodes badly for Symantec's turnaround effort. Shares of the security and storage specialist were off 10.07% at $18.80 in pre-market trading. Symantec's stock is down 14.81% over the last 12 months.


WATCH: Symantec Shares Suffer After Third CEO Shakeup in Five Years

FBR Capital Markets Analyst Daniel Ives described Bennett's termination as "jaw dropping" in a note released on Friday. "Despite a few speed bumps fundamentally over the past few quarters, and March guidance below expectations, we believe Mr. Bennett was viewed as key to the turnaround story at Symantec, and we think this abrupt changing of the guard could potentially lead some investors to throw in the "white towel" as it represents a big step backward in the company's recovery process," he wrote.

Bennett's termination marks the company's third CEO change in just over five years. Former Intuit (INTU) CEO Bennett took the company's reins from Enrique Salem in July 2012, vowing to revitalize the company, which has long been criticized for poor execution. In January 2013 he announced his turnaround plan for the company, which involved streamlining, a complete shift in the company's sales coverage model and a focus on 10 core areas, including information-security services, security gateways, data-center security and storage.

"While Mr. Bennett had only unveiled his new strategic direction for Symantec in January 2013, it appears the board was expecting a faster transition toward improved market positioning and growth, an Everest-like challenge, in our view, after years of missteps (e.g., acquisitions, execution issues)," wrote FBR Capital Markets' Ives.

During an interview in November, Bennett told TheStreet that he had underestimated the impact of the company's massive restructuring effort. Nonetheless, he said that he remained confident in his Symantec turnaround plan.

Bennett's termination prompted Jefferies to downgrade Symantec to 'hold' on Friday. "Following the abrupt CEO change, uncertainty around the direction and timeline for the next phase of the strategy will grow," wrote Jefferies analyst Aaron Schwartz, in a note. "The CEO change comes at a time when the implementation of the new strategic direction is still fairly early and follows several other senior management departures."

Schwartz added that deterioration in Symantec's morale and execution is a risk, citing the company's "uncertain" strategic and operational direction.

Michael Brown has been appointed as Symantec's interim president and CEO while it searches for a permanent replacement for Bennett. Brown, the former CEO of Quantum Corporation, joined Symantec following its merger with Veritas in 2005.

Bennett was the architect of Symantec's so-called "5/30 plan" - a roadmap to achieve 5% revenue growth and a 30% margins target by fiscal year 2017 that forms the cornerstone of the company's turnaround strategy.

Symantec reiterated its commitment to the 5/30 plan in the statement announcing Bennett's departure, and also reconfirmed its fiscal fourth-quarter guidance.

Bank of America Merrill Lynch, however, has warned that the CEO's termination further jeopardizes the 5/30 plan, and lowered its Symantec price target to $17 from $18 on Friday. "Our new $17 PO is based on a 15% probability the 5/30 plan will go as planned (vs 25% previously), given our lower level of confidence following the termination of the CEO," wrote Bank of America Merrill Lynch analyst Kash Rangan.

--Written by James Rogers in New York.

>Contact by Email.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs