Risk
8/20/2010
11:56 AM
George V. Hulme
George V. Hulme
Commentary
50%
50%

Intel Buys (Overpays For?) McAFee For Growth

Chipmaker Intel buys security software maker McAfee for $7.68 billion. The question is: why?

Chipmaker Intel buys security software maker McAfee for $7.68 billion. The question is: why?From Paul McDougall's story yesterday:

Intel shook up the security landscape Thursday, announcing that it has agreed to acquire antivirus software maker McAfee for $48 per share, or $7.68 billion. The deal, if it passes regulatory muster, would enable the chipmaker to offer tightly integrated hardware and software security solutions for PCs, servers, and mobile devices.

Intel said it plans to operate McAfee as wholly-owned subsidiary within its Software and Services group. Company officials said the increase in threats that target online computing is a major reason behind the acquisition.

That $48 a share is a hefty 50 percent plus premium on McAfee's previous day's closing price of $29.93. So why did Intel pay up so much?

Rumors of other suitors at the potentially at acquisition table have been plentiful: such as Microsoft or IBM. That's always a possibility. Eric Jackson, senior contributor at TheStreet.com however sees Intel's move as a desperate grasp for growth:

This big-chip company's future success as a stock is based on its ability to continue to grow its top-line. With the PC market potentially set to take a pause, Intel's growth story is imperiled. Therefore, why not grab a high-margin software business that's running in a duopoly to pad the numbers.

That makes sense considering the security software market continues to be a bright spot of growth. Gartner estimates the segment to grow more than 11% this year over last. (See: Security Software Market Expected To Grow).

And growth is what Intel appears to seek, based on these quotes from Intel CEO Paul Otellini:

"With the rapid expansion of growth across a vast array of Internet-connected devices, more and more of the elements of our lives have moved online,"

"In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences,"

But at a 50% premium? The price they paid to achieve that growth was too high. And with INTC falling 3.52 percent the day the deal was announced to close at $18.90, I'd say investors agree.

For my security and technology observations throughout the day, find me on Twitter.

Comment  | 
Print  | 
More Insights
Register for Dark Reading Newsletters
White Papers
Cartoon
Current Issue
Flash Poll
Video
Slideshows
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2015-0121
Published: 2015-05-30
IBM Rational Requirements Composer 3.0 through 3.0.1.6 and 4.0 through 4.0.7 and Rational DOORS Next Generation (RDNG) 4.0 through 4.0.7 and 5.0 through 5.0.2, when LTPA single sign on is used with WebSphere Application Server, do not terminate a Requirements Management (RM) session upon LTPA token ...

CVE-2015-0191
Published: 2015-05-30
** REJECT ** DO NOT USE THIS CANDIDATE NUMBER. ConsultIDs: CVE-2014-0191. Reason: This candidate is a duplicate of CVE-2014-0191. A typo caused the wrong ID to be used. Notes: All CVE users should reference CVE-2014-0191 instead of this candidate. All references and descriptions in this candid...

CVE-2015-0193
Published: 2015-05-30
Cross-site scripting (XSS) vulnerability in IBM Business Process Manager (BPM) 7.5.x through 7.5.1.2, 8.0.x through 8.0.1.3, and 8.5.x through 8.5.5.0 and WebSphere Lombardi Edition (WLE) 7.2.x through 7.2.0.5 allows remote authenticated users to inject arbitrary web script or HTML via a crafted URL...

CVE-2015-0733
Published: 2015-05-30
CRLF injection vulnerability in the HTTP Header Handler in Digital Broadband Delivery System in Cisco Headend System Release allows remote attackers to inject arbitrary HTTP headers, and conduct HTTP response splitting attacks or cross-site scripting (XSS) attacks, via a crafted request, aka Bug ID ...

CVE-2015-0743
Published: 2015-05-30
Cisco Headend System Release allows remote attackers to cause a denial of service (DHCP and TFTP outage) via a flood of crafted UDP traffic, aka Bug ID CSCus04097.

Dark Reading Radio
Archived Dark Reading Radio
After a serious cybersecurity incident, everyone will be looking to you for answers -- but you’ll never have complete information and you’ll never have enough time. So in those heated moments, when a business is on the brink of collapse, how will you and the rest of the board room executives respond?