Symantec makes huge purchase of MessageLabs

Symantec just announced an acquisition of UK based MessageLabs at an incredible 4.8X trailing revenue multiple.   McAfee only paid 2X for Secure computing.  At those multiples Webroot is worth over $500 million and Fortinet would go for $1.2 Billion (my estimates).   I admit  that this is a good time for companies with cash to make acquisitions but I would expect the valuations to be going down not up!

This is a big push for Symantec to get into the so called Security as a Service space with a hosted email security solution.  Email is frankly the only succesful SaaS model out there.  Secure hosting and file transfer qualify as well, but are still in their infancy.  If this continues, watch out for reports of a feeding frenzy in the security space.  Qualys, the SaaS vulnerability management firm, is sure to be sucked up next.  

While I think hosted email is a great service and a great business model, I am perplexed by some not so lustrous outcomes from previous acquisitions.  St. Bernard Software acquired an SMB vendor in this space called Singlefin and it is not going well.   Webroot acquired another UK SaaS email vendor called Email Systems   and word is that they are not setting the world on fire.  There actually appears to be a geographic predilection for hosted email centered on the UK for some reason.

Proofpoint, who arguably has one of the best technology solutions for antispam, is one of the last standing vendors in the email security space now. They have a US based hosted solution in addition to their server product but, thanks to ATT and the NSA and the paranoia their network monitoring induces, is has not grown as quickly outside the US.  They acquired Fortiva, an email archiving solution, which is actually OEM'd by MessageLabs (and Microsoft's managed email service) which should make life complicated for Symantec.

Email security is a vibrant space.  This acquisition is a great opportunity for Symantec to demonstrate that they can execute on their split personality data center + security business model; while the remaining email security vendors hope that the result will be similar to Symantec's Brightmail acquisition:  the competition falls into a black hole never to be heard from again.