Intel Reportedly Looks Into Selling Security Business

By Jeffrey Burt  |  Posted 2016-06-27 Print this article Print
Intel systems

According to a report, Intel executives are meeting with bankers to go over options for its security unit, which is based on its McAfee acquisition.

Intel reportedly is considering selling its security business, the latest move by the chip maker as it continues to restructure to focus more on developing processors for the cloud and the Internet of things.

According to a report in the Financial Times, officials with Intel have been meeting with bankers to discuss the future of its cyber-security unit, which in large part is based on Intel's $7.7 billion acquisition of antivirus software vendor McAfee in 2011. The report said a deal could be the largest in the security field.

Citing unnamed sources, the Financial Times said that a group of private equity firms might join together to buy the Intel security business if it's sold at a price the same or higher than what the chip maker bought McAfee for.

Intel has declined to comment on the report.

The plan at the time of the McAfee acquisition was to take the company's technology and embed security capabilities into Intel processors for a broad array of systems, from PCs to connected devices. Putting security technology directly into the chips would help protect the systems from the growing range of cyber-threats.

However, the nature of cyber-security and the response to threats have changed radically over the years since Intel bought McAfee, according to Roger Kay, principal analyst with Endpoint Technologies Associates.

"Antivirus is kind of old school," Kay told eWEEK, noting that many of today's attacks are sophisticated phishing and spear phishing efforts and that security software vendors are increasingly addressing such new threats with technologies that go beyond antivirus. That calls for a "different set of skill sets than McAfee originally brought with it."

It's difficult to get a clear read on why Intel would sell its security business, which the company renamed Intel Security in 2014. Kay noted that changes are going on within Intel and said it could be that the McAfee acquisition now is more of a drag on its balance sheets than an asset. It also could be an indication Intel wants to move in another direction with its security efforts, having been able to cull talent, patents and customers from the McAfee deal.

"It does raise questions, though," Kay said. "They do need a security story of some sort, and that wasn't it. But they'll need a security story."

The move would come at a time when Intel is aggressively shifting its focus away from PCs and to the cloud, connected devices and 5G connectivity. The company's client business still accounts for 60 percent of Intel revenues, but the global PC market continues to contract, putting pressure on OEMs and component makers to find new growth markets. Intel has scaled back its ambitions in a mobile device space dominated by ARM and such partners as Qualcomm and Samsung, and instead is moving aggressively into other areas.

Intel CEO Brian Krzanich caused a stir in November 2015, when he named longtime Qualcomm executive Venkata "Murthy" Renduchintala as president of the newly formed Client and Internet of Things Businesses and Systems Architecture Group. Intel traditionally has hired top executives from within the company, but Krzanich instead went outside. The hiring has led to a number of longtime executives leaving Intel.

To accelerate the company's transformation, Intel has announced 12,000 job cuts—which is about 11 percent of the worldwide workforce—by the middle of next year. According to The Oregonian newspaper, Krzanich earlier this year addressed the disruption caused by the layoffs during an address streamed to employees worldwide, saying that he was working to rebuild trust and confidence, and that he doesn't expect another round of layoffs beyond what was announced.


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