Fortinet in play: Security on a chip makes it a valuable target

Fortinet has reportedly been approached by IBM about a potential takeover.

According to Bloomberg, IBM approached Fortinet, which is pondering strategic options. Fortinet specializes in unified threat management.

Intel's purchase of McAfee put the writing on the wall: Independent security vendors are going away. Even Symantec could be in play at some point.

One notable point about a potential Fortinet-IBM deal: Fortinet has products that put security on a chip (right). This merger of security and silicon is something Intel used to justify the McAfee purchase. Given IBM's semiconductor expertise, the Fortinet security tools would be an interesting fit. And if security on a chip is the next big thing Fortinet is extremely valuable.

William Blair analyst Jonathan Ho said:

We believe rapid consolidation in the security space including the recent acquisitions of ArcSight by HP and McAfee by Intel illustrate the demand for security companies by large systems integrators. Large systems integrators are increasingly offering end-to-end solutions such as data centers and cloud services to their customers, with security playing an important role as a differentiator.

Bloomberg reported that IBM-Fortinet talks appear to be at an advanced stage. Fortinet has a bevy of enterprise and government customers that would fit well with IBM. Fortinet is projected to report net income of $38.3 million on revenue of $317.5 million for 2010, according to Thomson Reuters.

Meanwhile, IBM is no stranger to security-related acquisitions. IBM has acquired Internet Security Systems (ISS), Watchfire, Consul Risk Management, BigFix on the security front and Open Pages and PSS Systems for risk management tools.