Intel Makes Security Play With McAfee Acquisition

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Intel is looking to expand beyond its semiconductor empire after making an offer to buy security vendor McAfee for nearly £5 billion

This is not the first time acquisition reports have surrounded McAfee. Back in May there was rumours that HP was looking to acquire McAfee, but in the end Hewlett-Packard announced the acquisition of Palm.

In April this year McAfee was at the centre of false positive controversy. It came when the company issued an anti-virus update, which mistakenly identified a vital Windows file as malware, crippling Windows XP systems.

McAfee said that only a small proportion of its customers were affected and offered to pay the costs of repairing PCs for home users, or those with home offices.

Intel Preps For Online

Despite glitches like this, Intel insists that McAfee has been in good financial health with double-digit, year-over-year growth and nearly 80 percent gross margins last year.

The group will be managed by Renée James, Intel senior vice president, and general manager of the group.

“With the rapid expansion of growth across a vast array of Internet-connected devices, more and more of the elements of our lives have moved online,” said Paul Otellini, Intel president and CEO in a statement. “In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences.”

“The addition of McAfee products and technologies into the Intel computing portfolio brings us incredibly talented people with a track record of delivering security innovations, products and services that the industry and consumers trust to make connecting to the Internet safer and more secure,” Otellini added.

Roadmap Ahead

“Hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow,” said Renée James. “This acquisition is consistent with our software and services strategy to deliver an outstanding computing experience in fast-growing business areas, especially around the move to wireless mobility.

“McAfee is the next step in this strategy, and the right security partner for us,” she added. “Our current work together has impressive prospects, and we look forward to introducing a product from our strategic partnership next year.”

Indeed, during the conference call Renée James said that she expect products to become available from the first part of 2011. She stressed that there was no need for Intel to come out with brand new silicon, but it seems that a “deep collaboration (i.e. McAfee tech inside Intel silicon) is ‘two years out’.

McAfee is a huge security player with approximately $2 billion (£1.3 billion) in revenue in 2009. It has approximately 6,100 staff. There is no word yet on whether there will be any redundancies.

Intel expects the combination to be slightly dilutive to earnings in the first year of operations and approximately flat in the second year, on a GAAP basis.

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Author: Tom Jowitt
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