Symantec Corporation (NASDAQ:SYMC) Eyeing Layoffs to Save $400 Million in Two Years

Symantec Corporation (NASDAQ:SYMC) says it could carry out layoffs as it eyes cost savings of up to $400 million in the next two years. Cost saving plan is in top gear, the firm having offloaded its Veritas storage business for $5.3 billion. With the selloff, the firm has also confirmed a new $500 million investment from Silver Lake Partners.

Symantec

Investors Payouts

All the proceeds from the sale of Veritas will be handed to investors in the form of buybacks and dividends. A special dividend of $4 a share should cost the company $2.7 billion. Symantec Corporation (NASDAQ:SYMC) has also bolstered its $2.1 billion buyback program announced in 2014 with an additional $2.3 billion. Symantec will use the $500 million Silver Lake investment to cater for part of the payouts, as some of the Veritas proceeds are overseas.

Dividends and buybacks payouts are all part of a payback to investors who have believed in the company’s story amidst years of slow growth and uncertainty. Veritas, which was acquired in 2004 for almost twice the selloff price, has been one of the firm’s biggest problems. The acquisition failed to live up to expectations partly because Symantec resorted to shrinking its consumer business.

The ongoing restructuring is all part of a plan that seeks to revitalize the firm’s prospects. Revenue and profit have continued to shrink in the recent years much to the concern of investors. Sales in the recent quarter were down by 6% with net income dropping by 23%. Cost cutting is no longer an option as growth remains a big challenge.

Negative Impact of Investor Payout

The security firm is in the process of tweaking its core business as it shifts its focus to selling solutions to companies rather than consumers. Investor paybacks will, however, come at a cost for Symantec Corporation (NASDAQ:SYMC). The paybacks could affect its ability to buy strategic acquisitions needed to trigger growth.

Symantec Corporation (NASDAQ:SYMC) can only achieve growth under the new business model by targeting startups to bolster its efforts on the same. That could be a challenge with most of the cash being used to cater for shareholder payouts. Tapping into the debt market to get funds for such acquisitions may also not make any financial sense at the moment.