Security vendor lets go of 3 percent of workforce to rebalance expenses and bolster margins
Security vendor McAfee has reportedly handed out hundreds of pink slips and said goodbye to long-time sales leader Bill McAlister, senior vice president of sales for the Americas, as it deals with a dip in sales and a channel restructuring.
The Lowdown: Since the beginning of the year, McAfee has laid off around 200 people in various departments in a general workforce reduction aimed at cutting expenses and improving operating margins, according to a report in The Information.
In addition, McAlister — a fixture in McAfee’s sales leadership team for the past 13 years and a staunch supporter of the company’s channel partners — has departed the security vendor. According to The Information, several other senior sales executives have left McAfee as well.
The Details: The precise number of people affected by the workforce reduction is unknown. In a statement to CRN, McAfee said the restructuring is part of the company’s effort to rebalance its resources and focus on high-growth investments.
The Impact: According to various reports and Channelnomics sources, the McAfee channel organization is largely unaffected by the layoffs. In the short term, any restructuring is unlikely to impact channel operations.
Background: McAfee and other legacy security vendors continue to try to find their way in a rapidly changing technology and security market. McAfee and Symantec, the two market leaders in endpoint and network security software, are facing stiff challenges by upstarts Crowdstrike and Cylance (both founded by former McAfee executives).
In October 2018, at its annual MPower event, McAfee told partners it was suspending its current channel program so it could rebuild its programs and operations for future growth. The suspension of the program means partners are not held to qualification standards while McAfee is redesigning its partner framework and systems.
McAfee is reportedly under increasing pressure by its private equity owners, TPG Capital, to increase operating margins to improve the company’s valuation.
In December, reports surfaced that TPG and Intel, the other stakeholder, were in talks to sell part or all of their interests in McAfee to Thoma Bravo, a private equity firm with extensive security holdings. If those talks happened, nothing came of them.
Channelnomics Point of View: McAfee’s explanation for the changes — rebalancing the company — is likely legitimate. The vendor’s sales and channel leadership are making a concerted effort to improve its partner program and relationships with resellers and managed service providers. McAfee’s next-generation endpoint security products are getting strong ratings from analysts, and its 2018 acquisition of Skyhigh to enter the Cloud Access Security Broker (CASB) market is paying dividends.
Additionally, McAfee isn’t the only security company seeing soft sales. Last week, Sophos reported a 2 percent sales increase, down from a 14 percent growth rate a year earlier, as demand for security systems — particularly hardware — fell. The softness in McAfee sales is likely part of a general trend among security buyers to rebalance their investments.