Sometimes activist investors have a lot to offer when they can actually make a difference in a public company. And sometimes activist investors just seem desperate to get a share price up but seem to have very little to really add. In the case of Symantec Corp. (NASDAQ: SYMC), the activist investor community easily could score a large victory for all shareholders involved.
Symantec has confirmed that it has received a submission by Starboard Value for the activist investor to name five nominees it would like to be elected to Symantec’s board of directors at the upcoming 2018 annual meeting of stockholders. It is worth pointing out that the company’s 2018 annual meeting has not yet been scheduled.
Starboard Value has amassed a 5.8% stake in Symantec, which is roughly 36 million shares. The number of shares was shown as purchases of common stock as well as forward purchase contracts at share prices that are mostly between $18 and $21 per share from June through August in 2018.
As far as why Starboard can make a difference at Symantec, beyond just the most recent struggles, the company has had major growth opportunities in online security that have been squandered over the years. Its stock also has been a horrible performer over the years, and the purchase of LifeLock hasn’t helped in the way many watchers might have hoped.
Another issue to consider here is that Starboard’s slate of nominees also looks solid. These people’s biographies have only highlighted a fraction of the companies that some of the nominees have been involved with.
Does Symantec know it has a serious problem? The company seems to be admitting its vulnerability, given its response:
Symantec maintains open communications with its stockholders and values constructive input that advances the goal of creating value for all stockholders. Over the last several weeks, we have had a dialogue with Starboard and we plan to continue these discussions.
Symantec already has confirmed that its audit committee of the board of directors is conducting an internal investigation. The company also said that it intends to finalize and file its financial statements with the Securities and Exchange Commission (SEC) after completing its own investigation and subsequent procedures by its independent public accounting firm. At that point Symantec will schedule its 2018 annual meeting and file its proxy materials with the SEC.
Symantec’s long-term stock chart (see below) should spell out how this has been a continual disappointment over the past decade.
Symantec shares were last seen trading up 7.8% at $20.00, and the 13 million shares traded in the first hour of trading were already about 150% above the average daily volume. Its 52-week trading range is $17.81 to $34.20, and the Thomson Reuters consensus analyst price target was previously listed as $21.47.
Starboard’s five nominees have extensive knowledge of the technology landscape. These were sent to Symantec on July 5 and they were listed in Starboard’s 13D filing as follows (taken in part and abbreviated from the SEC 13D filing):
- Nora M. Denzel has substantial expertise in technology and in particular in enterprise software, having held various executive management positions at Intuit from 2008 to 2012, including as Senior Vice President of Big Data, Social Product Design and Marketing and Senior Vice President and General Manager of the QuickBooks Employee Management Division. Ms. Denzel was also formerly interim Chief Executive Officer of Outerwall, an automated retail solutions provider, from January 2015 to August 2015. She currently serves as a member of the Board of Directors of Ericsson and she has also served on the Boards of Advanced Micro Devices and Talend S.A.
- Peter A. Feld is a Managing Member and Head of Research of Starboard Value LP and has significant expertise serving as a shareholder representative on numerous technology company boards that have created substantial value for shareholders. He has substantial experience in corporate finance, best-in-class corporate governance, and a deep understanding of capital markets.
- Dale L. Fuller has substantial expertise in the technology industry, and directly applicable experience in the cybersecurity market in particular, having served as a senior executive and director of numerous companies, including McAfee, Inc.
- Richard S. Hill has substantial expertise as a senior executive and director of technology hardware and software businesses, including in the semiconductor and enterprise software markets. Mr. Hill served as the Chief Executive Officer and a member of the Board of Directors of Novellus Systems Inc. (“Novellus”), a designer, manufacturer, and marketer of semiconductor equipment used in fabricating integrated circuits, until its acquisition by Lam Research Corporation in June 2012.
- Michael G. Strachan has significant expertise in finance and accounting and as a director of technology companies. He currently serves as a member of the Board of Marvell Technology Group, a producer of storage, communications and consumer semiconductor products, since May 2016, where he serves as Chairman of the Audit Committee. Previously, he served on the board LSI Corporation from March 2009 until its acquisition by Avago Technologies in May 2014.
There are a lot of people with software and hardware experience here, including what is now the cloud and security that are needed to help turn around the Symantec ship. As with all companies in a state of flux after internal investigations, just because an activist investor is getting involved does not at all imply that all the bad news has worked its way into the current share price.