Entrust Bags Business Signatures

Authentication specialist Entrust today bought privately held anti-fraud specialist Business Signatures for $50 million in cash, as it looks to boost its data security story.

Business Signatures is a competitor to Cyota, which will soon be part of the EMC portfolio, thanks to its recent $2.1 billion acquisition of RSA. (See EMC Buys RSA, Users Welcome Super-Deal, RSA Ramps Up Revenues , and Did EMC Overpay?.) Cyota, which was bought by RSA back in December, has already been identified as a potential jewel in the crown for EMC, offering the storage vendor a clear path to lucrative deals in the financial sector. (See RSA to Acquire Cyota, EMC Secures RSA for $2.1B, RSA IDs Phishing Technique, and RSA Reports on Fraud.)

"Customers have immediate security requirements that over time will spread across multiple applications and storage devices," said Bill Conner, Entrust CEO, speaking on a conference call this morning. "Sensitive data does not reside in one place, it is fluid and is used across the organization," he added.

Business Signatures' flagship software eFraud monitors firms' customer transactions. The product works by converting HTTP data streams generated by a transactional Website into what it describes as "business signatures." These could be, for example, identifying which individual customers are setting up fund transfers on a financial firm's Website.

Over the next six months, Entrust will integrate Business Signatures' technology with its own IdentityGuard authentication software, although Chris Voice, Entrust's CTO, told Dark Reading that this is just the first step in a broader data security push.

As well as authentication, Entrust offers a family of software products which aim to lock down data as it moves across a network from, for example, file systems and email servers. "We have an information platform that's about keeping data encrypted," he explained.

Sometime in 2007, according to the exec, Entrust will look to integrate eFraud with this technology, adding an additional layer of internal security. "One of the strengths of eFraud is that it can passively detect what is happening on the wire," he said. "There's no reason why that could not be applied to your internal networks."

The exec added that the combined offering could be used, for example, to monitor data going to and coming from a database. But Voice said that Entrust is not setting itself up as a direct competitor to encryption specialists such as Decru and Neoscale. (See Decru Unveils New Gear, NeoScale Intros Encryption Suite, and NeoScale Claims Speedy Encryption.)

"What we have found is that there is enough encryption technology coming from the storage and the database vendors," he said, adding that Entrust will remain focused on data as it moves across an organization.

Certainly, more and more vendors are touting encryption, particularly at the file level, as a way to avoid embarrassing and potentially costly data breaches. (See File Security Gets All Cryptic, Decru Picks Key Partners, and New PGP Extends Encryption.)

Voice also confirmed that Business Signatures CEO Peter Relan and the firm's 40-strong workforce will be moving over to Entrust. The Dallas-based firm will also keep Business Signatures' site in Redwood City, Calif.

Just as Cyota represents an opening into the lucrative financial market for EMC, Entrust already sees Business Signatures in terms of dollar signs. Execs on this morning's call said that they expect the new acquisition to deliver up to $4 million in revenue over the remainder of this year, and around $10 million over the next 12 months.

This performance could prove critical for Entrust, which also released its second quarter financial results today, posting revenues of $22.1 million, down from $24.8 million in the same period last year, and just below analyst estimates of $22.61 million. (See Entrust Announces Q2.)

The vendor also recorded a second quarter net loss of $1.3 million, or 2 cents per share, compared to net income of $1.1 million, or 2 cents per share, in the year ago quarter. This was also below analyst estimates.

In trading today, shares of Entrust dropped 21 cents (6.77 percent) to $2.89.

— James Rogers, Senior Editor, Byte and Switch