In what analysts have described as the company’s biggest transformation ever, security giant Network Associates sold the Sniffer network protection product line this week to orient its focus on antivirus, intrusion prevention, research and consumer business — changing its name to McAfee in the process.
The deconsolidation and reorganization is among the final divestment moves of a company that has gobbled up security units from other companies and has taken on other business strategies — such as help-desk services and the Sniffer network products — during the Internet boom, according to analysts.
Analysts have praised McAfee for its plans to reduce costs and regain profitability. The plan has been in the works for several months. The company said it would sell the Sniffer unit for US$275 million to Silver Lake Partners and Texas Pacific Group, which will retain the Sniffer name under a new stand-alone organization called Network General Corporation — fittingly the original name of the company that started Sniffer.
McAfee now will consist of its enterprise antivirus and intrusion-prevention business, McAfee Labs research organization and the consumer security business. “This company is engaged in the most aggressive and important transformation in its history,” said Network Associates chairman and CEO George Samenuk. “These changes will transform us into a more powerful, more profitable, and more competitive company for the future.”
Unloading Business Models
Aberdeen Group research director Eric Hemmendinger told TechNewsWorld that the latest divestments and reorganization indicate a larger, longer strategy of reversing the previous administrations’ acquisition efforts.
“If you go back to a year ago, this was really a company with three different businesses under the same roof,” Hemmendinger said, referring to the Sniffer network protection, help desk and security. “They’ve unloaded two of those.”
Hemmendinger said that, while most companies tend to wait too long to unload a divestment, Network Associates has made the right move at the right time and the move will likely please investors.
“In a time with so much consolidation, this is somewhat unusual,” Hemmendinger said. “These guys want to be sure they can focus — they just took a giant step in that direction.”
Indicator of Health
Gartner research vice president Richard Stiennon said that Network Associates has gone full circle from the original idea of a security conglomerate in the heyday of the Internet to a company dedicated to the sole purpose of “blocking bad stuff.”
“Now they are a very focused company,” Stiennon told TechNewsWorld. “Dropping the name Network Associates is dropping all of that old legacy and being known as a company that detects and blocks the bad stuff.”
Stiennon said that, while the new Network Associates, or McAfee, may struggle to focus its sales arm on security rather than the network, the divestment and company streamlining are “right on the mark.”
“This is all focus,” Stiennon said. “I think it’s indicative of health, not trouble.”
Same Sniffer Strategy
Forming a new company to be called Network General, Silver Lake Partners and Texas Pacific Group indicated they will continue to develop, support, sell and market the Sniffer products, focusing exclusively on network and application-performance solutions.
The companies also said they would work toward continuity by building on the existing Sniffer employee base and management team.
“We are confident that this transaction will benefit Sniffer customers, employees and business partners alike,” said Sniffer division president Ray Smets, who will head the management of the new company. “The new Network General will be an organization focused wholly on best-of-breed network and application-performance solutions.”
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