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
Dark Reading Tech Digest, Dec. 19, 2014
Software-defined networking can be a net plus for security. The key: Work with the network team to implement gradually, test as you go, and take the opportunity to overhaul your security strategy.
Flash Poll
Video
Slideshows
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2014-2188
Published: 2015-02-26
The Authentication Proxy feature in Cisco IOS does not properly handle invalid AAA return codes from RADIUS and TACACS+ servers, which allows remote attackers to bypass authentication in opportunistic circumstances via a connection attempt that triggers an invalid code, as demonstrated by a connecti...

CVE-2015-0594
Published: 2015-02-26
Multiple cross-site scripting (XSS) vulnerabilities in the help pages in Cisco Common Services, as used in Cisco Prime LAN Management Solution (LMS) and Cisco Security Manager, allow remote attackers to inject arbitrary web script or HTML via unspecified parameters, aka Bug IDs CSCuq54654 and CSCun1...

CVE-2015-0632
Published: 2015-02-26
Race condition in the Neighbor Discovery (ND) protocol implementation in Cisco IOS and IOS XE allows remote attackers to cause a denial of service via a flood of Router Solicitation messages on the local network, aka Bug ID CSCuo67770.

CVE-2015-0651
Published: 2015-02-26
Cross-site request forgery (CSRF) vulnerability in the web GUI in Cisco Application Networking Manager (ANM), and Device Manager (DM) on Cisco 4710 Application Control Engine (ACE) appliances, allows remote attackers to hijack the authentication of arbitrary users, aka Bug ID CSCuo99753.

CVE-2015-0882
Published: 2015-02-26
Multiple cross-site scripting (XSS) vulnerabilities in zencart-ja (aka Zen Cart Japanese edition) 1.3 jp through 1.3.0.2 jp8 and 1.5 ja through 1.5.1 ja allow remote attackers to inject arbitrary web script or HTML via a crafted parameter, related to admin/includes/init_includes/init_sanitize.php an...

Dark Reading Radio
Archived Dark Reading Radio
How can security professionals better engage with their peers, both in person and online? In this Dark Reading Radio show, we will talk to leaders at some of the security industry’s professional organizations about how security pros can get more involved – with their colleagues in the same industry, with their peers in other industries, and with the IT security community as a whole.