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McAfee deal stirs speculation about Symantec [San Jose Mercury News, Calif.](San Jose Mercury News (CA) Via Acquire Media NewsEdge) Aug. 21--Intel's surprising announcement that it has agreed to buy security software firm McAfee for $7.7 billion stirred speculation Friday about what the deal could mean for McAfee's bigger rival, Symantec, which some analysts believe could become a takeover target itself. In a note to his clients, Brent Thill of UBS Investment Research said the proposed marriage between Santa Clara neighbors Intel and McAfee might prompt Silicon Valley giants Oracle, Hewlett-Packard and Cisco Systems -- as well as IBM -- to buy Mountain View-based Symantec so they can get into the security software market, too. Officials at Oracle and IBM couldn't be reached for comment, and Cisco and HP wouldn't discuss if they might be interested in Symantec. Symantec also declined to talk about that, but issued a statement expressing confidence in its business prospects. "We believe the acquisition provides an opportunity for Symantec," it said. "Our sales force and go-to-market activities will aggressively pursue new and existing customers during the period of time prior to the closure of the transaction and during the integration period when McAfee will be distracted." While several analysts said it is not beyond the realm of possibility that Symantec could be acquired, they viewed that as unlikely. HP had long been rumored to have been thinking of buying McAfee, said Peter Firstbrook, a security software specialist at Gartner Research. He speculated that HP might even have been quietly bidding to buy McAfee and ultimately drove up Intel's offer to a purchase price some experts have called exorbitant. But because of Chief Executive Mark Hurd's recent resignation, "they're not going to make any new move until they get a new CEO," Firstbrook said. And although Cisco had considered buying McAfee, he added, it ultimately decided against doing so and may have even less interest in Symantec, which would command a heftier price. Since it's much easier to buy someone else's security software than develop it from scratch, "it wouldn't surprise me that people have been sniffing around" Symantec, said Fred Ziegel of Blue Water Capital Markets. Nonetheless, he estimated it would take at least $15 billion to gobble up Symantec and "I'm not sure people could pay that." "Our sense is that security acquisitions are likely to continue," Jefferies & Co. said in a note to its clients. But because Oracle, HP and IBM are different businesses than Intel, it's unlikely those companies "will feel the need to quickly play catch-up" by buying a company comparable to McAfee. Analysts also were split on whether the Intel-McAfee combination -- which still must be approved by McAfee's shareholders and government regulators -- would pose more competition for Symantec. Intel, which provides the vast majority of chips used in personal computers, has said it intends to develop chips with built-in security software from McAfee as a way to extend its reach into smartphones, tablets and other gadgets. With 2009 sales of $1.9 billion, McAfee is the second-biggest security software company behind Symantec, which posted 2009 sales of $35.1 billion, though Symantec's business is broader because it also helps its customers manage and store data. Some speculated that businesses needing security software may turn increasingly to Symantec because of uncertainties about how McAfee will fare under Intel's ownership. But Joseph Bonner of Argus Research said, "It could put McAfee in a stronger position because Intel is this huge company behind them." Daniel Ives of FBR Capital Markets agreed. Noting that Symantec has performed poorly in some areas in recent years, having a giant like Intel teamed up with McAfee "increases the pressure on Symantec to show better execution." Contact Steve Johnson at 408-920-5043 To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.mercurynews.com. Copyright (c) 2010, San Jose Mercury News, Calif. Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com, e-mail [email protected], or call 866-280-5210 (outside the United States, call +1 312-222-4544) |