Network Associates remembers roots with CyberMedia purchase
"This is a tactical move," said Peter Stewart, vice president and general manager of Network Associates' (Nasdaq:NETA) new McAfee Software division. "Our No. 1 rival in this space is Symantec Corp.'s Norton line. CyberMedia's products allow us to better compete against them." CyberMedia's (Nasdaq:CYBR) software products include its application delete utility UnInstaller, a hard disk tool kit FirstAid, an automatic update utility called Oil Change, and the consumer PC security application Guard Dog.
The $130 million cash deal for the company has already been given the go-ahead by the boards of both companies. Network Associates will pay $9.50 for each outstanding share of CyberMedia stock.
Consumer focus
The move wasn't the only consumer-oriented play by Network Associates Tuesday. The Santa Clara, Calif. company spawned a separate business unit to handle PC products, it announced on Tuesday.
"The (division) will account for about 5 to 10 percent of our business," said Stewart. The new unit will be called the McAfee Software division.
The success of Symantec in the consumer market seems to be egging on Network Associates. Estimating that its rival receives 70 percent of its revenue from the consumer side, NAI decided to turn up the heat, said Stewart.
"The best defense is a strong offense," he said. "Symantec is moving into the corporate marketplace, so we strengthen our offering here."
Schizo security
But Tuesday's acquisition was a puzzler for some.
"I can't believe they paid that much for a company that is in the red," said Jim Balderston, security analyst with Internet watcher Zona Research Inc., of Redwood City, Calif.
And analyst Larry Dietz of security research firm Current Analysis Inc. thought the foray into the consumer market was a wild goose chase.
"I think it's best to say that Network Associates is a schizophrenic company," said Dietz. "On one hand, they are competing with large security firms. On the other, they are entering the PC utilities market."
Tuesday's purchase is Network Associates' sixth in 10 months (See timeline). Encryption technology from Pretty Good Privacy Inc., firewall technology from Trusted Information Systems, and help-desk technology from Magic Solutions Inc. are all part of the wide-ranging security interests the firm now controls.
"A lot of the value of these technologies is brand awareness," said Balderston. "They are going to have an interesting juggling act to keep the brand and still integrate the products into their offerings."