REUTERS: Symantec Corp faces an uphill battle to turn around its business and win investor confidence, analysts said on Friday, after Chief Executive Officer Greg Clark became the fifth top executive in six months to leave the cybersecurity company.
Clark's shock departure on Thursday came along with a gloomy set of quarterly results that fell short of expectations on revenue and a warning on profit, sparking a 17 percent slump in the company's shares in trading before the bell.
That erased all of Symantec's gains this year and at least six brokerages cut their price targets on the stock, leaving just one of 27 brokerages with a "buy" rating, two with a "sell" and 24 on "hold."
"We found the results and outlook disappointing and management change frustrating as we had thought there were emerging signs of enterprise strength last quarter that enabled a line-of-sight to previous FY/20 goals," RBC analysts said.
"Now investors find themselves in a familiar position of uncertainty as they await the new CEO, which could entail further changes and assessments and reset expectations."
Richard Hill, who joined the company's board as a nominee of hedge fund Starboard, will become interim CEO. While Symantec did not say why Clark, CEO since 2016, left the company, Hill said Clark wanted to take care of his ailing father.
Symantec also named Vincent Pilette, formerly with Logitech, as its new chief financial officer, replacing Nicholas Noviello, whose departure was announced in January.
A slew of key executives including Chief Operating Officer Michael Fey and Chief Marketing Officer Michael Williams, have exited the company since late last year.
The company has been struggling with slowing sales and is still under investigation by U.S. regulators over an accounting irregularity.
"We believe Symantec is looking towards fiscal 2020 as a fresh start with new management, but the company will be challenged to make up for lost ground in the enterprise space," Morningstar analyst Mark Cash said.
Starboard disclosed a 5.8per cent stake in the company in August and demanded the appointment of five directors to its board before finally settling for three.
Hill has been a board member of several companies as a Starboard nominee and led the turnaround of Marvell Technology Group Ltd. Marvell's shares have more than doubled since Starboard took a stake in 2016.
Credit Suisse analysts, who lowered their price target on the stock to US$18 from US$23, noted that both new executives had limited software industry experience and the changes could lead to broader company disruption.
Hill, who was quite vocal on the conference call with analysts, said he was the ideal candidate for the job after turning around Marvell. "If I feel disappointment in the numbers and I think it is bad, I will tell you that and what we are going to do to fix it."
Clark did not attend the conference call.
(Reporting by Supantha Mukherjee and Vibhuti Sharma in Bengaluru; editing by Patrick Graham)