Symantec Exits Joint Venture with Huawei for $530 Million
Symantec is one of the major players in the enterprise storage and security software, where it competes with EMC (NYSE:EMC), IBM (NYSE:IBM), NetApp (NASDAQ:NTAP) and HP (NYSE:HPQ). It announced that it has sold its stake in Huawei Symantec Technologies, its joint venture with Huawei, for $530 million. [1] Huawei had a 51% stake in the venture, while Symantec had a 49% stake. After the deal is consummated, Huawei will control the entire entity. It was established in 2008, to integrate Symantec’s storage and security software into network hardware built by Huawei for enterprises.
See our full analysis for Symantec
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The deal may actually be good for Symantec, which will be making a 250% profit on the $150 million it invested in the venture. The joint entity had reported losses in the previous year and was a drag on Symantec’s earnings. We should see a slight jump in Symantec’s profit margins in the quarters following the completion of the deal.
We don’t expect it to have any significant impact on Symantec’s stock price. We have a $22 Trefis price estimate for Symantec, which stands nearly 20% above its current market price. Enterprise security software and storage software account for around 15% and 40% of its Trefis price estimate.
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