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TheStreet Open House

Cyber Security Giant Symantec Sacks CEO -- and Shares Are On Sale

NEW YORK (TheStreet) -- You only get so long to perform a turnaround. Steve Bennett -- who was replaced as the CEO of the computer security software company Symantec (SYMC - Get Report) on Thursday -- probably thinks that 20 months was not long enough. But the company's board were not convinced. As they wrote in a statement that was released after the market close Thursday:

"This considered decision was the result of an ongoing deliberative process, and not precipitated by any event or impropriety."

When Bennett joined Symantec, its shares were below $15. During his tenure as CEO, the stock rallied as high as $27, as investors initially agreed with his efforts to streamline and reorganize Symantec's product range -- including Norton anti-virus software -- as well as to cut costs. The last two quarterly corporate disclosures, though, have disappointed the market. This appears, at first glance, to have had some influence.

So what should investors think?

The shares are down today to levels last seen over a year ago. As of 11:30 a.m., they're trading at $18.02, down 13.8% for the day. Year to date, the stock is down 23.4%.

Yet the cyber security sector appears to be as attractive as ever. Businesses and consumers, on both their networks and electronic devices, only have a greater need for security over time. That's why companies like Check Point Software (CHKP) and Palo Alto Networks (PANW) have had such strong stock prices recently.

Clearly, though, something is not right with Symantec. Accompanying the disappointing recent quarterly results have been a series of resignations (and appointments) to the management team.

My instinct is that Steve Bennett's desire -- as expressed in the last quarterly results conference call in January -- to "continue to drive improved efficiency and better resource allocation across the company" has upset too many of the company's employees. The approach likely lost the support of the other board members. Combine this with a poor last couple of quarters, and this led to yesterday's end to his CEO tenure.

But Symantec still has a lot going for it. Despite all its recent troubles, Symantec still has strong brands like Norton. It continues to generate free cash. Plus, at the current share price, it has a dividend yield of nearly 3%. It has more than $700 million of outstanding share buyback capability and has net cash on the balance sheet of well over $1 billion. That's significant for a company with a market capitalization of under $13 billion. That will have caught the eye of other companies, including those in private equity.

Longer-term technology sector watchers may remember that Intel (INTC) purchased Symantec's peer McAfee a few years ago.

Given the importance of cyber security to both businesses and individuals, Symantec's troubles and weak share price present a prime time for investors to do their due diligence. It's time to act. Embrace the volatility and consider Symantec shares now, when they're on sale.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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