Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Endpoint

9/9/2016
03:45 PM
Connect Directly
Twitter
LinkedIn
RSS
E-Mail
50%
50%

Intel Sheds McAfee Majority Stake Amid Failed 'Synergies'

Chipmaker's $7.7 billion investment in security firm did not deliver as expected, analysts say

Intel's decision this week to sell a majority stake in its McAfee subsidiary to asset firm TPG for $3.1 billion gives Intel a way cut losses on what many agree has been an underwhelming investment for the company.

Intel acquired McAfee for about $7.7 billion in August 2010. Company officials at the time had described the acquisition as bolstering Intel’s security capabilities in key areas like wireless mobility and the emerging market for the Internet of Things. The company had touted the investment as evidence that it had made security a strategic focus area along with energy-efficient computing and Internet connectivity.

Intel’s disclosure this week that it has agreed to sell 51% of its McAfee stake shows that the acquisition failed to live up to those expectations.

“The McAfee and Intel deal never really delivered on any synergies,” says Jon Oltsik, an analyst with Enterprise Strategy Group. In recent times, the McAfee unit has in fact been somewhat languishing in the market as Intel focused on another more immediate strategic concerns. “This move gives McAfee the ability to turn things around,” Oltsik says.

Under the agreement announced this week, Intel will get $3.1 billion and retain 49% of its stake in McAfee. TPG will make an equity investment of $1.1 billion and own 51% of the newly spun-off security firm.

Chris Young, senior vice president and general manager of the Intel Security Group, will become the new CEO of McAfee.

In announcing the deal, Intel CEO Brian Krzanich positioned McAfee as one of the largest pure-play security vendors in the market and predicted that it would thrive as an independent company with the backing of TPG and Intel.

Rumors about Intel planning to divest its security business have been circulating for several weeks now. Wall Street analysts had suggested that such a move would not be surprising considering that McAfee’s profit margins were much lower than that generated by Intel’s hardware business, and the uneasy fit between McAfee’s software technology and Intel’s core business.

“Spinning McAfee out as a separate entity is the right move for Intel,” says Richard Stiennon, a former security analyst and chief strategy officer of Blancco Technology Group. “It was a poorly contrived strategy -- if you can even call it that -- where they haphazardly combined anti-malware with silicon. It was doomed from the start and should never have happened in the first place,” Stiennon says.  

But as a standalone cybersecurity company, the new McAfee will have its work cut out trying to compete in a market that demands innovation and nimbleness, he notes.

Oltsik believe that an opportunity still exists for McAfee to leverage its technology expertise and establish itself as an enterprise-class vendor. But it may first need to acquire some technologies to fill in gaps in its product portfolio, he says.

“I don’t think this impacts McAfee enterprise customers,” Oltsik says. “If anything, it’s a positive step in that McAfee will be more attentive and focused. I’ve heard some stories about support problems over the past few years. Now McAfee can focus on its customers and fix these problems.”

Intel’s experience with McAfee could serve as a cautionary tale to companies making security acquisitions without thinking through whether it's a fit with their existing business, says Pete Lindstrom, an analyst with International Data Corporation. But the spinoff should cause little disruption for customers, he adds.

“McAfee is large enough and mature enough to run its business with little impact to its customers,” Lindstrom says.

Related stories:

 

Jai Vijayan is a seasoned technology reporter with over 20 years of experience in IT trade journalism. He was most recently a Senior Editor at Computerworld, where he covered information security and data privacy issues for the publication. Over the course of his 20-year ... View Full Bio
 

Recommended Reading:

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
jries921
50%
50%
jries921,
User Rank: Ninja
9/15/2016 | 1:52:23 PM
49% is still a controlling interest
The headline made it look like Intel was unloading it.
Whoopty
50%
50%
Whoopty,
User Rank: Ninja
9/12/2016 | 7:19:24 AM
Who? What?
I must admit, much like Yahoo's recent sale, I'm somewhat surprised that McAfee even exists still. I've heard far more about its once upon a time founder and his shenanigans since the Intel buy than I have about the anti-virus firm itself. 



Do people think it will have a better life under its new owners?
COVID-19: Latest Security News & Commentary
Dark Reading Staff 7/14/2020
Omdia Research Launches Page on Dark Reading
Tim Wilson, Editor in Chief, Dark Reading 7/9/2020
Register for Dark Reading Newsletters
White Papers
Video
Cartoon
Current Issue
Special Report: Computing's New Normal, a Dark Reading Perspective
This special report examines how IT security organizations have adapted to the "new normal" of computing and what the long-term effects will be. Read it and get a unique set of perspectives on issues ranging from new threats & vulnerabilities as a result of remote working to how enterprise security strategy will be affected long term.
Flash Poll
The Threat from the Internetand What Your Organization Can Do About It
The Threat from the Internetand What Your Organization Can Do About It
This report describes some of the latest attacks and threats emanating from the Internet, as well as advice and tips on how your organization can mitigate those threats before they affect your business. Download it today!
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2020-10287
PUBLISHED: 2020-07-15
The IRC5 family with UAS service enabled comes by default with credentials that can be found on publicly available manuals. ABB considers this a well documented functionality that helps customer set up however, out of our research, we found multiple production systems running these exact default cre...
CVE-2020-10288
PUBLISHED: 2020-07-15
IRC5 exposes an ftp server (port 21). Upon attempting to gain access you are challenged with a request of username and password, however you can input whatever you like. As long as the field isn't empty it will be accepted.
CVE-2020-15780
PUBLISHED: 2020-07-15
An issue was discovered in drivers/acpi/acpi_configfs.c in the Linux kernel before 5.7.7. Injection of malicious ACPI tables via configfs could be used by attackers to bypass lockdown and secure boot restrictions, aka CID-75b0cea7bf30.
CVE-2019-17639
PUBLISHED: 2020-07-15
In Eclipse OpenJ9 prior to version 0.21 on Power platforms, calling the System.arraycopy method with a length longer than the length of the source or destination array can, in certain specially crafted code patterns, cause the current method to return prematurely with an undefined return value. This...
CVE-2019-20908
PUBLISHED: 2020-07-15
An issue was discovered in drivers/firmware/efi/efi.c in the Linux kernel before 5.4. Incorrect access permissions for the efivar_ssdt ACPI variable could be used by attackers to bypass lockdown or secure boot restrictions, aka CID-1957a85b0032.