McAfee, a wholly-owned subsidiary of
), which is the world's largest manufacturer of semiconductor
products, plans to acquire Stonesoft, a network firewall
solutions provider, for $389 million in cash.
Finnish company Stonesoft Corp. offers network security
solutions. Its product portfolio includes Firewall/VPN, IDS/IPS,
SSL VPN, Management Center (SMC) and Virtualization Solutions. It
is a global business and has 6,500 customers worldwide.
California-based McAfee, Inc. was acquired by Intel in Feb 28,
2011 for $7.68 billion and is now a wholly-owned subsidiary of
the chip giant. The acquisition was Intel's first step into the
security segment, which has tremendous potential. As more
individuals and businesses all over the world get connected, they
are more susceptible to cyber attacks. Therefore, the growing
number of connected devices (primarily tablets and smartphones),
the bring-your-own-device (BYOD) strategy adopted by many
companies, the SaaS model being increasingly adopted by software
companies and the increasing volume of business being carried out
online (banking, e-commerce, academic, government) are secular
drivers of security solution sales. Not only is security
essential at the client device level (receiver/transmitter of
data), but also at the network level (transport of data) and at
the cloud level (transmitter/receiver of data).
The acquisition will strengthen Intel's portfolio of security
solutions. Intel's growing interest in software and security is
also borne out by the recent elevation of Renee James to the
position of President. James was behind the McAfee acquisition
and is also probably driving this one. The company is certainly
devoting resources in the area ($7.7 billion for McAfee and
nearly $400 million on this one). Intel has deep pockets and
deeper strategy. While its mobile efforts were off to a slow
start, Intel has whatever it takes to pursue opportunities in
other growing markets as well.
Intel reported revenues of $12.58 billion, within the guidance
range of $12.7 billion (+/-$500 million) in the first quarter of
fiscal 2013, down 6.7% sequentially and 2.5% year over year.
Weaker-than-expected PC demand stemming from tablet
cannibalization and restrained consumer buying due to tighter
budgets continued in the quarter.
Intel's shares carry a Zacks Rank #3 (Hold). Other
semiconductor stocks that are equally worth considering include
On Semiconductor Corp.
Magnachip Semiconductor Corp
Lam Research Corp.
), all carrying a Zacks Rank #2 (Buy).
INTEL CORP (INTC): Free Stock Analysis Report
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