MOUNTAIN VIEW, Calif. (AP) - Symantec will sell its Veritas information management business for $8 billion in cash with plans to funnel proceeds back into its main line of work, cybersecurity, and to buy back shares.
MOUNTAIN VIEW, Calif. (AP) — Symantec will sell its Veritas information management business for $8 billion in cash with plans to funnel proceeds back into its main line of work, cybersecurity, and to buy back shares.
The Mountain View, California, said Tuesday that the private equity investment firm The Carlyle Group and Singapore's sovereign wealth fund, GIC, will acquire the business in a deal expected to close Jan 1.
Symantec Corp. anticipates receiving about $6.3 billion in net proceeds. It said the sale will give it a financial foundation to expand its security business and return capital to shareholders.
The company also announced Tuesday that its board approved a $1.5 billion increase in its share buyback program, and it has decided to maintain its quarterly cash dividend at 15 cents per share.
Companies often say share repurchases help shareholders, because theoretically they cut down on the total number of shares and thus boost earnings per share. But critics say that repurchases don't usually lower the number of shares outstanding because companies can issue more shares, and buybacks also divert money that might be spent on new infrastructure or hiring.
Symantec said Tuesday its business sale provides "significant proceeds" to continue investing in the fast-growing market for security products and services.
Symantec had said last fall that it planned to separate its business into two independent companies to maximize their growth prospects.
The security software maker also said Tuesday that it recorded adjusted earnings of 40 cents per share in its fiscal first quarter on $1.5 billion in revenue.
Both figures missed Wall Street expectations, where analysts expected, on average, earnings of 43 cents per share on $1.52 billion in revenue, according to Zacks Investment Research.
Shares of Symantec climbed 2.5 percent, or 58 cents, to $23.49 before markets opened Tuesday. The stock had fallen about 11 percent so far this year, as of Monday's close. The Standard & Poor's 500 index, in contrast, has climbed about 2 percent.