IronPort Buyout May Open New Doors for Cisco

 
 
By Matt Hines  |  Posted 2007-01-05 Email Print this article Print
 
 
 
 
 
 
 

Company insiders and industry experts say Cisco's acquisition of IronPort will help the infrastructure giant deliver on its promise of the self-defending network and expand its applications security features.

While some industry watchers were surprised by the $830 million price tag that Cisco Systems agreed to pay for messaging security specialists IronPort, most analysts agree that the deal opens a range of new opportunities for the networking giant.

In addition to improving the technological underpinnings necessary to deliver the "self-defending network," experts said that Ciscos buyout of IronPort, announced on Jan. 4, gives it a foothold in a number of security markets.

Among the sectors that the deal allows Cisco, of San Jose, Calif., to tap into are several areas of the rapidly-expanding applications security segment, specifically around providing network-based defenses for unified communications, Web content filtering and data encryption.

While privately held IronPort, based in San Bruno, Calif., doesnt publicly announce its revenues, most industry watchers peg its 2006 returns at somewhere between $50 and $100 million. Even if the firm performed at the high-end of those projections, some observers may question why Cisco was willing to pay such a premium for the company, whose business is primarily built around sales of messaging security hardware.

However, the deal has more implications for Cisco than may immediately meet the eye, said Brad Adams, managing director at investment bank Boston Corporate Finance in Westwood, Mass.

"Even if IronPort is a $100 million company, those types of valuations werent the primary driver here; as with EMCs buyout of RSA Security, at end of day the value of the deal is weighted more toward what they get from the technology they are buying," Adams said. "What seems like an extraordinary valuation might make sense if you understand what they feel they have to gain."

What Cisco has to gain, beyond additional products to feed the growth of its overall security business, are technologies that will allow the firm to move aggressively into applications security, he said. By joining that sector of the market the firm wont just compete against its traditional rivals, such as Juniper Networks, it will begin to do battle more closely with security stalwarts such as anti-virus leader Symantec, which is also set on controlling the niche.

Industry watchers observed that while entering the applications defense space may be out of Ciscos comfort zone, as most of its security products are focused on defending IT systems infrastructure, the acquisition will go far beyond helping the company merely filter out spam and viruses, IronPorts best-known talents.

Click here to read more about Ciscos acquisition of IronPort. "Some of the more interesting pieces in this deal are the encryption technologies that IronPort bought, along with some of the content compliance tools," said Paul Stamp, analyst with Forrester Research, in Cambridge, Mass. "This is somewhat uncharted territory for Cisco, but it establishes a beachhead for them in some big growth areas; if they really want to get into the business of adding value to the traffic theyre processing, then getting into content and policy security is a crucial step forward."

Stamp said that Cisco is trying to move beyond shifting of packets and involving itself more with the performance and reliability of messaging applications themselves.

Next Page: A link between messaging and the network



 
 
 
 
 
 
 
 
 
 
 

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