16:19 18.01.2007 | All news from "Spam & Abuse"
Cisco to buy Web security firm IronPort
The acquisition of the privately held software and equipment vendor is Cisco's latest move to grow by integrating niche technologies that complement its main product line of routers and switches, which direct Internet traffic.
Cisco said the acquisition, its fifth-largest, would enable the company to offer corporate clients a more comprehensive range of products. Its shares rose 68 cents, or 2.45 percent, to $28.41 in afternoon trading.
IronPort is known for "reputation filters" that block spam by examining a sender's record. Blocking spam can help a company save bandwidth, as well as save employees the trouble of combing through unwanted e-mail messages.
"IronPort has a reputation on filtering where they know the reputations of people who are sending e-mails or generating Internet traffic," Richard Palmer, senior vice president of Cisco's security technology group, told Reuters.
"We can use that information at Cisco for the routers and switches and firewalls to filter traffic."
Prudential Equity Group analyst Inder Singh said the deal would bolster Cisco's product portfolio, adding that it would raise "competitive pressure against other messaging security vendors," such as Symantec Corp. (Nasdaq: - ).
Cisco said it would pay for IronPort with a combination of cash and stock and the deal is expected to close in the fiscal third quarter, which ends in late April.
While IronPort would become a Cisco unit, Palmer said it would be somewhat independent, with CEO Scott Weiss remaining at the helm and the headquarters staying in San Bruno, California. Most of IronPort's 408 employees will stay.
Weiss, who will report to Palmer, said IronPort had been eyeing an initial public offering, but decided a deal with Cisco would give the company access to a wider range of companies. It was advised by Evercore Partners.
IronPort's current client focus is on large technology, media and financial services firms.
"There's a huge business market that we're not tapping," Weiss said.
Weiss said the Web messaging security market is growing at around 25 percent a year. IronPort said in November that worldwide spam volumes had nearly doubled year-on-year.
Cisco said the move would be neutral to earnings in fiscal 2007. The company's shares have risen more than 55 percent from a year ago, helped by stronger sales on the back of increasing Internet traffic.
Cisco is also expected to benefit from strong growth in cable set-top box maker Scientific Atlanta, an acquisition it closed last February as part of a strategy to expand into video and consumer markets.
Analysts said the latest deal was particularly positive for IronPort amid consolidation in the Internet security industry.
Secure Computing Corp. (Nasdaq: - ) said in July it would buy messaging security firm CipherTrust Inc., IronPort's key competitor. The world's largest software maker, Microsoft Corp. (Nasdaq: - ), bought e-mail security firm FrontBridge in 2005, about a year after Symantec bought Brightmail.
"The theme of consolidation is a key theme that we expect to continue in the security software space, as the larger vendors must continue to get 'bigger and better'," said Daniel Ives, an analyst at Friedman, Billings, Ramsey & Co.
Secure Computing shares fell 1.35 percent to $6.56 and Symantec rose 1.9 percent to $21.74.
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