December 16, 2004 12:21 PM PST

Bulked-up Symantec eyes new conquests

With the ink barely dry on their merger agreement, top executives at Symantec and Veritas Software are already mapping out new territory and possible acquisitions for the combined companies to tackle in the future.

The $13.5 billion deal announced on Thursday creates the world's fourth-largest software maker with a wide-ranging product set and little overlap. That's good from a business standpoint and gives the combined companies plenty of leverage in selling to big businesses looking to reduce the number of vendors they deal with, analysts said.

"The complexity of having multiple vendors is simply not affordable."
--John Schwarz, Symantec chief operating officer

What isn't immediately clear is how the companies can merge their technology into new products. Symantec is the largest maker of PC security and antivirus software, while Veritas specializes in software to manage the kind of large data storage systems used by big companies.

John Schwarz, Symantec's chief operating officer, told CNET News.com that the companies are already scoping out areas where combined products might make sense. "On our side, antispam technology, for instance...fits nicely with the archiving technology from (Veritas)," he said.

An additional area is what Schwarz calls "information integrity," or helping customers recover data to return their systems to a known good state after a system crash. "Veritas can do the backup and recovery. Symantec can tell the customer when to do it. So there are some very quick value propositions that we can capitalize on right off the bat," Schwarz said.

Another potential sphere of integration: The companies could link Symantec's data backup software with Veritas' server-based data protection tools to offer companies a means for recovering desktop and laptop data, said Michael Sotnick, a vice president at Veritas. Despite advances in server storage management, desktop and laptop management is still a headache for many large companies.

Those examples play off of a Symantec strength--selling consolidated enterprise management tools, said Nitsan Hargil, an analyst with Friedman, Billings, Ramsey & Co.

Schwarz acknowledged that most big companies are looking to pare their technology supplier list. "The complexity of having multiple vendors is simply not affordable. Most CIOs I talk to are reducing the number of vendors they deal with by a factor of 10 or more," he said.

A clear strength of the companies that could easily lead to more technology integration is the similarity in the management styles of Symantec CEO John Thompson and Veritas chief executive Gary Bloom. "I'm less concerned with their ability to integrate. Both executives come from a sales background, both have similar cultures, both are software companies from Silicon Valley and both have direct sales and channel partners," Hargil said.

And both companies are willing to buy additional companies and technologies in the future, Schwarz said.

Symantec has spent nearly half a billion dollars in the past year to acquire several companies, including Brightmail, ON Technology and SafeWeb, which sell tools to battle spam and secure corporate networks.

Likewise, Veritas has made a series of acquisitions over the past two years in an effort to move beyond storage management. Last year, it acquired Ejasent for $59 million, and in late 2002, it bought Precise Software Solutions and Jareva Technologies.

"I won't speculate on specific areas, but both companies are acquisitive in nature and both companies have the balance-sheet strength to continue to acquire, and I would not be surprised if you saw additional actions on our part," Schwarz said. "Nothing as big as this merger, though."

CNET News.com's Dawn Kawamoto contributed to this report.

 

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