Word from Network Associates last week that it is selling its Sniffer management tools business to narrow its focus on network security runs counter to an industry trend to tighten security and management integration, observers say.
Word from Network Associates (NET) last week that it is selling its Sniffer management tools business to narrow its focus on network security runs counter to an industry trend to tighten security and management integration, observers say.
The company also is going back to its roots by renaming itself McAfee, the moniker of the anti-virus software outfit that in 1997 merged with Sniffer creator Network General to form Network Associates. The move is part of Network Associates’ broader effort to boost its operating profit margins to 25% by 2005, by focusing on high-growth security products.
“We’re divesting Sniffer Technologies because it’s the only remaining part of our business not related to security,” Network Associates CEO George Samenuk said last week during a conference call with Wall Street analysts.
The money-losing Sniffer unit is being sold to two private-equity firms, Silver Lake Partners and Texas Pacific Group, for $275 million, with the deal expected to close by the third quarter. The two equity firms are expected to establish a new company called Network General.
The move was not completely unexpected: Network Associates last year dealt another management business, its Magic help desk division, to BMC Software for $47 million. Still, the announcement puzzled some industry watchers.
“There is no reason why [Network Associates] couldn’t have integrated the Sniffer technology into its security products. And it would have been a smart move,” says Pete Lindstrom, research director at Spire Security, an independent research firm.
In fact, a year ago Network Associates said it wanted to add intrusion-prevention features into Sniffer.
The move also comes in the wake of competitor Symantec announcing that it would add management features – for systems and storage – to its security products.
Meanwhile, management software leaders such as Computer Associates, IBM Tivoli and Microsoft are melding management and security technologies.
CA, for example, last year bought Raytheon’s SilentRunner technology to add real-time traffic monitoring and protocol analysis to its eTrust security software.
As for Network Associates, while it is clear the company is focusing on security, its exact product direction within that market could be better defined, Lindstrom says. The company is strong in anti-virus software and has the potential to do well with intrusion-prevention products such as McAfee Entercept Management System, he says.
Network Associates last week reported preliminary first-quarter financial results, noting that its year-over-year McAfee revenue grew 11%.
Looking ahead, Samenuk said he expects McAfee will work closely with the new Network General because they will share a common customer base.
Sniffer customers say they were surprised by the announcement but are hopeful that the new Network General will do a better job of sales and technical support than Network Associates has done.
“The quality control in that product went way down after McAfee bought it,” says William Griswold, network manager at Siemens Medical Systems in Malvern, Pa., which uses Distributed Sniffer to troubleshoot the firm’s large Gigabit Ethernet LAN.
About 500 of Network Associates’ roughly 3,300 employees are expected to join Network General.
