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Risk

9/22/2008
08:51 PM
George V. Hulme
George V. Hulme
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McAfee Secures Place In UTM Market With $465 Million Acquisition

There's still big demand for unified threat management (UTM) devices, especially in the SMB part of the market, and with its $465 million acquisition McAfee is making a big move that will shore its network security products.

There's still big demand for unified threat management (UTM) devices, especially in the SMB part of the market, and with its $465 million acquisition McAfee is making a big move that will shore its network security products.As much as things change, they stay the same. Seems like yesterday when McAfee (which was Network Associates for a time) sold off PGP (disk encryption), CyberCop (intrusion prevention and vulnerability scanning), and its Gauntlet network firewall. In fact, McAfee went on a selling spree, and unloaded many of its security applications.

All of that started to change in 2003 with its decision to then focus heavily on host and network-based intrusion prevention with its Entercept and IntruVert acquisitions. It then bought Foundstone for its vulnerability scanner.

Today, McAfee bought Secure Computing, which offers a range of intrusion prevention, firewall, Web security, e-mail, and data protection, as well as a level of network access control technology. Incidentally, Secure Computing is the company that McAfee sold its Guantlet firewall.

There's not much in the way of technological overlap here. It looks like McAfee is going to be able to round out its network security offerings, especially when it comes to Secure Computing's Web filtering, TrustedSource technology, and secure E-mail. It's also getting Secure Computing at a significant time of weakness for the company. This is from The Motley Fool:

Yet Secure Computing's financials have been anything but secure in recent quarters. Debt plagued its balance sheet before Aladdin Knowledge Systems (Nasdaq: ALDN) agreed to pay $65 million in cash for its SafeWord authentication technology. Free cash flow -- once a staple of the business -- went missing in the second quarter.

With that in mind, it should be no shock that Secure Computing's stock has been suffering (even more than the overall market). Its 52-week high was $10.54, and it closed at $4.52 before the acquisition announcement. Its stock subsequently shot up 23.45% to close today at $5.58.

According to this story in CRN, while McAfee has 12,000 solution provider partners, there's little overlap with the 2,000 Secure Computing partners. So it should get a channel boost, as well.

It looks like McAfee scooped up troubled Secure Computing at a good deal, and saved that company from more pain. Should McAfee be able to get actually get some synergies from the acquisition, and execute on them, it could turn out to be a good move.

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