In a move that could add shareholder value, leading utility software provider Symantec (Nasdaq: SYMC) announced today that it plans to spin off its Internet Tools business unit to create a new, independent company.
Symantec, which manufactures such well-known products as Norton Antivirus and Visual Page, plans to leverage its position in the Java development solutions market by creating a new company that focuses on the enterprise market. More specifically, the new company will provide solutions for e-commerce and technology.
The new company will attempt to tap into the large market for sell-side e-commerce software, a market that Forrester Research predicts will grow to $1.4 billion by 2002. The company will also continue to develop and support high-end Java tools program VisualCafe.
“Creating an independent company will put the spotlight on our expertise and capability as an Internet company,” said Symantec president and CEO, John W. Thompson. “…Our Java development solutions are purchased by enterprise developers to Web-enable legacy systems, business systems and create e-commerce solutions. Our other products are purchased by professionals who have responsibility for keeping networks secure and users productive. By setting up two separate companies we are able to focus very clearly on the needs of these two very different buying groups.”
Strong Customer Base
Symantec’s Internet Tools divisions already serves customers including Nike, United Airlines and GE Information Systems and is partnered with companies including Compaq, Hewlett-Packard and Oracle. According to PC Data, the Internet Tools unit has grown its share of the Java market from 33 percent to 56 percent in the past year, putting it ahead of Sun, Microsoft and IBM.
Symantec expects to form the new company in the next three to nine months. Approximately 120 employees will transfer from the Internet Tools business unit to the new company, and additional hiring should begin shortly. Symantec will be the only initial stakeholder in the new company, but the company expects to attract additional investors.
Anytime there’s a spinoff, the possibility of a future public offering is something worth discussing. That’s probably a long way off, if it happens, but having the flexibility that comes with a new company could help Symantec find various ways to tap into Internet stock valuations.
Shares of Symantec climbed 1/2 to 23-15/16 in early trading today,while many technology stocks were giving back some of Wednesday’s gains.