AVG Technologies Confirms Targeted Layoffs

AVG Technologies, an anti-virus software company that's pushing hard into the SMB market, has had targeted layoffs, After Nines Inc. has learned. The move comes only days after Cisco Security, Intel Security (formerly McAfee) and Symantec announced key executive updates amid the ever-changing IT security market landscape.

In response to an After Nines Inc. inquiry about rumored layoffs, AVG Technologies offered this statement:

"AVG’s SMB business continues to evolve and grow successfully. Today we can confirm that we will be making changes to our Newton office in line with our long term growth strategy.
The company is aligning functions and costs globally by streamlining a number of positions in our North Carolina office, to support the focus of that office on AVG CloudCare. The US is a key market for AVG and this will not affect SMB sales support for our partners.
AVG values the contribution of each of our employees. We expect some positions will unfortunately be affected, and our goal is to minimize employee impact caused by this realignment."

AVG: The Bigger Picture From Wall Street

In recent weeks, investors have not been happy with AVG's growth forecasts. During a July 2014 earnings call, the company trimmed its revenue outlook for fiscal 2014 to the low end of expectations ($365 million to $405 million). As a result, AVG's stock has been trading near a 52-week low.

Like many software and security companies, AVG's business is in transition. During a July earnings call, CEO Gary Kovaks describe the transition as "a very substantial pivot from a PC based single product company to a multiple product mobile and cloud based security solution provider." Kovaks described increased competition on the desktop, an evolving platform search business, and a major AVG Zen push for a broad set of customers.

AVG isn't alone in this transition. Intel Security (formerly McAfee), Cisco Systems and Symantec have each been facing similar IT security business challenges and transitions.

SMB: A Closer Look

AVG's SMB business features solutions like CloudCare and Managed Workplace (acquired from Level Platforms in 2013). The Level Platforms buyout was supposed to provide an immediate SMB software lift, but the deal initially hit some bumps -- including executive turnover, plus poor tracking and monetizing of remotely deployed software agents, sources say.

Rebranded as AVG Managed Workplace, the Level Platforms business dipped significantly below AVG's original expectations in 2013 but has recovered significantly in recent months, sources say.

During that July 2014 earnings call, Kovaks pointed to growth in the Managed Workplace business but declined to answer a Wall Street analyst question about partner figures.  (Penton's MSPmentor, my former stomping ground, is the best source for tracking how AVG works with Level Platforms' so-called managed services provider base.)

AVG's War Chest

Is it time for AVG investors to panic? Perhaps not. In addition to CloudCare and AVG's core Anti-Virus technology, investors are closely watching AVG Zen -- basically, an all-in-one security platform designed to protect all household devices. The challenge? Just about every other AV security maker offers or plans to offer similar suites for home PCs, tablets and smartphones.

The figure I'm watching most closely is AVG's bank account. As of June 2014, AVG had roughly $45 million in cash and cash equivalents, according to a company earnings release issued July 30, 2014.

During that AVG earnings call, CEO Kovaks revealed that the company acquired a "small technology integrator and distributor in Brazil" to accelerate local presence in that region. It's a safe bet he's scouring the market for more software to plug into AVG's business.

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