Symantec CEO Predicts Upcoming Shakeout In Endpoint Security Market

The opportunity around endpoint security has yielded an incredibly crowded market. However, Symantec CEO Greg Clark predicted that a major shakeout of legacy and startup players alike is on the horizon.

"We believe as an industry that we are in the early innings of a dramatic shakeout of the winners and losers [in endpoint], with an estimated $80 billion to be spent on enterprise security," Clark said on the company's third-quarter earnings call Wednesday.

Clark said there had been a massive market entrance of next-generation endpoint security startups, as well as legacy vendors looking to add next-generation endpoint capabilities. However, he said most only provide "a slice of endpoint." He said Symantec thinks the future of endpoint is being able to offer a complete solution across protection, detection and response.

[Related: 10 Endpoint Security Trends That Translate Into Opportunity For Solution Providers]

"In the near future, we predict there will be less than a handful of strategic security providers, Symantec being one, who have made the proper investments to succeed … We do not believe these companies will remain competitive over the long run," Clark said.

Clark said Symantec is "committed to being at the forefront of innovation on the endpoint," a focus that centers around the company's new Symantec Endpoint Protection (SEP) 14 launch. .Symantec launched SEP 14 in October and has since seen "great" pipeline growth for the solution. He said Symantec soon plans to add further integrations with the Blue Coat portfolio, including web security services and the cloud SOC.

Sales overall for Symantec in the third quarter were above estimates, with $1.04 billion in revenue reported, up 15 percent year-over-year. Enterprise security sales were $644 million, up 30 percent from last year. Net income for the quarter, ended Dec. 30, was $46 million, down 73 percent from the year-ago quarter.

Clark said Symantec's integration with Blue Coat, which it closed a $4.65 billion acquisition of in August, has "made great progress" on both the product integration, cost-efficiencies and go-to-market approaches.

CFO Nick Noviello said Symantec has already achieved cost savings in procurement and organizational effectiveness in the integration of Symantec and Blue Coat. He said the company is in the beginning stages of realizing cost savings in IT and real estate. The company estimates to see $400 million in net cost savings at Symantec and $150 million in Blue Coat efficiencies, he said. He said the company has already realized over $200 million in net cost savings and efficiencies in fiscal 2017, which is better than original expectations (those savings exclude considerations related to the LifeLock acquisition).

Clark said he expects the $2.3 billion LifeLock acquisition, which added identity protection and remediation capabilities to Symantec's consumer business, to close by Feb. 9.

Symantec said it expects fourth-quarter sales to be between $1.039 billion and $1.059 billion, up 20 to 23 percent annually, with enterprise security sales between $655 and $671 million, up 41 to 45 percent year over year. Symantec expects, at best, to break even for that quarter but it may report a loss as high as $0.02 a share.