After shares of Symantec plunged last week following its disclosure of an internal investigation over concerns flagged by an ex-employee, the company said it would provide information about the probe in an investor call on Monday (May 14). The news sent the company’s shares soaring as high as 12 percent, which was the stock’s largest gain within nearly six years, Bloomberg reported.
News of the call was posted as analysts became concerned when the company didn’t have a question-and-answer portion of its post-earnings conference call on Thursday (May 10) – a move that Cowen & Co called “shocking” – and it reportedly cancelled call-backs with analysts. Cowen also said “it could be a while before transparency and investor confidence improves,” even though the firm cautioned that the matter, while serious, “may all amount to nothing.”
In a Forbes post on Sunday (May 13), Carson Block, chief investment officer of Muddy Waters Capital, said Symantec’s acquisition of Blue Coat Systems in 2016 might be part of the company’s current issues. That deal came with a price tag of $4.65 billion, and Symantec brought in several of the company’s executives. Block wrote that it “seems rare” that a large corporation would trade its own executive team for that of a company it just acquired, a decision that might have created internal strife.
“The move could have set up an ‘us’ versus ‘them’ war in the ranks,” Block wrote in Forbes. “Such a highly politicized environment can create a toxic culture that leads to mistakes, cover-ups and outright wrongdoing.”
The news comes as Symantec warned on Thursday (May 10) in a press release that its financial results and earnings targets could be altered depending on the outcome of an internal investigation brought on by the concerns of an ex-employee. The security software company said the audit committee of the board of directors had hired an independent counsel and other advisors to assist in the investigation. Symantec said it alerted the U.S. Securities and Exchange Commission (SEC) and that it will continue to keep the government agency apprised of the inquiry.
“The investigation is in its early stages, and the company cannot predict the duration or outcome of the investigation,” Symantec said. “The company’s financial results and guidance may be subject to change based on the outcome of the audit committee investigation. It is unlikely that the investigation will be completed in time for the company to file its annual report on Form 10-K for the fiscal year ended March 30, 2018 in a timely manner.”