Symantec to buy SecurityFocus, Riptech, Recourse

Security vendor Symantec Corp. announced three high-profile acquisitions late Wednesday at the same time it reported its financial results for the second quarter 2002. Symantec will acquire SecurityFocus Inc., Riptech Inc. and Recourse Technologies Inc. for a total of about US$355 million in cash, the company said.

Symantec, which is based in Cupertino, California, currently sells antivirus software, personal firewalls, security appliances, utilities and other products. The acquisitions, all expected to close in mid-August, will take Symantec strongly into additional and new markets, and potentially make it the dominant player in those areas, according to an analyst.

SecurityFocus, which Symantec will acquire for $75 million, offers a security event monitoring and alert service, as well as a threat database. The company also hosts a number of high-profile security e-mail lists, including Bugtraq. The San Mateo, California, company's offerings will be integrated with Symantec's antivirus research and response capabilities, Symantec said.

Riptech provides managed security services for firewalls, intrusion detection systems, virtual private networks and other security products. The company is located in Alexandria, Virginia. Symantec will buy it for $145 million.

Recourse, which is based in Redwood City, California, is a vendor of intrusion detection systems (IDS), including the ManHunt and ManTrap products. Symantec already sells its own IntruderAlert IDS product. Recourse will come to Symantec with a $135 million price tag.

The deals were announced at the same time that Symantec reported $316 million in revenue for the second quarter of 2002, up from $228 million in the same quarter last year.

Markets reacted favorably to the news in off-hours trading, with Symantec's stock (SYMC) trading at $34.81 per share, up over its Wednesday closing price of $33.10.

Analysts also praised the deal.

"This positions them clearly to own the entire threat management space," which includes IDS and security intelligence and monitoring services, according to Peter Lindstrom, senior security strategies analyst at the Hurwitz Group Inc.

"This is Symantec's major play into owning threat management," he said.

The deals bring Symantec a number of "intriguing" products and technologies, he said.

Symantec's moves also leave IDS powerhouse Internet Security Systems Inc. (ISS) as the only other major threat management player and puts Symantec rival Network Associates Inc. (NAI) at a disadvantage, he said. That situation could lead to further consolidation, he added.

"It looks like NAI needs to buy ISS to create the space we're looking for," he said, referring to the market.

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