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November 11, 2007

Security re-acquisitions help McAfee bounce back

At significant cost to its investors, McAfee has re-collected many of the system and information protection products that it dropped between 2002 and 2004. With its mission statement of proactively securing systems and networks from known and as yet undiscovered threats, it owns a comprehensive and extremely attractive range of protection services that can be used by every type of systems user.

By CBR Staff Writer

In particular, October 2007 has proved to be an extremely successful period for McAfee in its quest to add to the extensive range of its security products that it now controls. Earlier in the month, the company declared its intention to buy data protection (encryption) provider Safeboot for $350 million. It followed up on this recently with the announcement that it will acquire certification vendor ScanAlert for an initial purchase price of $75 million, with further performance-related monies to follow on later if targets are achieved.

Back in the early days of the new millennium, before McAfee finally started to get its corporate act together, the company had traded as Network Associates with a variety of seemingly unconnected company brands such as McAfee (anti-virus (AV) and intrusion prevention (IPS)), Sniffer (network tools), Gauntlet (firewalling), and PGP (encryption). The brand images may have had a disconnected look, but the range of systems and data protection tools would today look like a decent shopping list for anyone trying to put together a strong portfolio of security solutions. Unfortunately, at that stage, Network Associates was not enjoying the best of financial health, and short-term thinking was the order of the day. Non-essential products that were deemed not to be central to the company’s core IT security plans were sold off; PGP and Gauntlet went in 2002 and Sniffer followed in 2004.

At that time, Network Associates stated that it would focus all its efforts on core IT security services (AV and IPS), which were said to account for around 75% of the company’s annual sales. This final re-entrenchment was accompanied by a re-branding exercise and the emergence of McAfee as the new company image. It had been something of a rocky ride, but, as it has turned out, 2004 was a significant turning point.

Since then, the company, under the McAfee image, has re-emerged as a powerhouse of the security industry. The ScanAlert and Safeboot acquisitions are just the latest in a long line of purchases that have seen McAfee extend its reach to provide protection solutions for all types of user. $350 million sounds like a high price to pay to get back into the information protection arena, especially when you consider that five years ago the company already owned similar products from one of the sector’s better known players in PGP. One of McAfee’s latest offerings, Total Protection for Enterprise, now provides a comprehensive range of system protection facilities that cover network access control and includes firewall, anti-spyware, anti-spam, AV, and IPS, with many of these products having been brought in via acquisition.

The company is now so appealing that one has to consider, given the acquisitive nature of the enterprise technology sector and its fascination with all things security (12 months ago IBM gathered in ISS and EMC brought onboard RSA), at what stage will McAfee itself become a target that is too attractive to miss?

Source: OpinionWire by Butler Group (www.butlergroup.com)

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