NortonLifeLock (NLOK - Free Report) is reportedly laying off 55 employees each in San Francisco and Mountain View, as inferred from documents filed with California regulators.
The company reportedly notified the laid-off employees about their impending settlement on Nov 19, 2019. The retrenchment will go into effect from Jan 17. In fact, another 19 layoffs are expected to take place in Mountain View around mid-February.
NortonLifeLock also filed two separate California WARN notices for the layoff of 16 people in Culver City, Southern CA. Further, notices were filed in Oregon and Texas, where the company is in the process of cutting 50 and 42 jobs, respectively.
Job Cuts Part of Cost-Cutting Efforts
These moves are in line with the company’s cost-reduction strategy, which is currently a top priority. This was mentioned by management after debuting as NortonLifeLock.
The company stated that it would undergo a transition period over the next 12 months, wherein it would realign its cost structure to boost revenue growth, cash flow and earnings.
Post the sale of the rights of its previous name, Symantec, to Broadcom (AVGO - Free Report) , the company is likely to shift operations to its headquarters in Tempe, AZ. Thus, reducing the number of offices is leading to several layoffs.
The real estate shed is also part of its cost-cutting strategy. After the Broadcom deal, NortonLifeLock moved out of its office in a tower at 100 California St. and set up an office in a Regus shared office space.
Notably, NortonLifeLock is being hurt by changing customer spending behavior and execution risks. Declining direct customer revenues and a shrinking user base are affecting the top line.
The company reported $1.3 billion of stranded costs at the end of the second quarter of fiscal 2020.
Also, Sales & Marketing (S&M) expenses grew 8% on a year-over-year basis to $189 million. This further explains the motive behind laying off positions such as product managers, marketing and sales professionals.
Preparing for Another Sale?
When Symantec had begun laying off jobs in August 2019, it was a preparatory move ahead of the sale of its Enterprise business to Broadcom. The company had also announced its intentions to downsize, vacate or close several facilities as part of its restructuring plan.
Although NortonLifeLock did not respond to questions regarding what inspired these layoffs, speculations about the sale of its remaining Consumer Safety business are rife.
Recently, rumors started doing the rounds that NortonLifeLock might get acquired by Intel (INTC - Free Report) -owned McAfee, and private equity firms TPG and Thoma Bravo.
It remains to be seen whether the layoffs are part of cost-cutting or there is more to it.
Zacks Rank and A Key Pick
NortonLifeLock currently carries a Zacks Rank #4 (Sell).
A better-ranked stock in the broader technology sector is Fortinet, Inc. (FTNT - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Fortinet is currently pegged at 14%.
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