Multiple outlets are reporting that Symantec (SYMC), which bought storage software leader Veritas for $10.6 billion in 2005, is soon to break itself up into a security company and a storage software company.

SYMC segments their business into User Productivity & Protection, Information Security, and Information Management. The Information Management segment includes backup and recovery, archiving and eDiscovery, storage and high availability solutions, i.e. the old Veritas.

IM’s revenue (FY14 $2.5B) has been flat for the last 3 years while gross margins and operating income has shrunk. Something needs to be done.

Rearranging the deck chairs
Given the weakness of SYMC’s results, together and as components, management seems to have concluded that two companies would be more attractive as acquisitions. That’s wise as IM seems unlikely to make it as a stand-alone business.

Their NetBackup business gives them some runway, but no one is looking to SYMC for breakthrough innovation. As an independent company they’d be free to change course if they can – acquisitions of their own? – and they might be able to capitalize on their channel. The Veritas brand – if they chose to revive it – might still be an asset as well.

The StorageMojo take
The Symantec/Veritas mashup was stupid from the getgo. As noted in Veritas Goes Quietly Into That Good Night back in 2005:

The largest independent storage software company can’t think of anything better to do for its stockholders than sell itself. . . .

Leaving aside the all-too-likely chance that the management teams of both companies are clueless or motivated by payouts they get based on certain outcomes . . . what does this mean?

Some analysts posit that the personnel savings, primarily in sales and marketing, will justify the sale. That supposes that both . . . sales forces are underutilized, or that the cross-selling opportunities are so compelling that big sales cuts will be possible, but neither is likely given the very different markets the two play in. . . .

No, Veritas is MBA smart and marketing stupid. Does anyone believe that customers are happy with storage management software today, when 40% of backups fail, data disappears every day, and storage is far from a commodity?. . . But Veritas, despite excellent resources, smart people, great margins and a broad penetration into the F1000, couldn’t figure out what to do to grow their business.

Nor is Symantec likely to provide the missing expertise. . . .

[Bolding added]

Now, of course, the past decade’s storage software innovation has made the environment much tougher for out-of-touch incumbents like Symantec’s IM group. But splitting SYMC will help ensure a softer landing for the IM group’s employees.

Much better than continuing an accelerating decline into oblivion.

Courteous comments welcome, of course.