NAI to Sell Sniffer, Change Name to McAfee

Network Associates Inc. on Thursday said it has agreed to sell its Sniffer business unit for $275 million in cash and that it will change the companys name to McAfee Inc. once the sale is final.

Both of the moves have been widely anticipated within the security industry for several months, and NAI officials have been quite open about the changes coming to the company.

Sniffer, which sells network management devices and software, will be purchased by two groups of investors, Silver Lake Partners and Texas Pacific Group, who plan to form a new company to manage the business.

The new entity will be named Network General Corp., a name that harkens back to NAIs early days. In 1997, the original Network General Co. merged with McAfee Associates to form Network Associates.

The sale of Sniffer will take about $200 million in revenue off of NAIs top line this year, and about 450 to 500 employees will be moving to the new Network General. The sale is expected to close in the third quarter.

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NAI is in the middle of a major business overhaul, and the sale of Sniffer fits with other moves the company has made in the past few months. Since the acquisitions of IntruVert Networks Inc. and Entercept Security Technologies Inc. last year, company officials have been working to shed the companys image as strictly an antivirus provider and position NAI as an intrusion-prevention company. The Sniffer unit was not a good fit with that vision, and NAI executives have been shopping it for some time.

“We have determined that Sniffer Technologies is not core to our business,” said George Samenuk, CEO at NAI, based in Santa Clara, Calif.

The company sold off its Magic help-desk unit earlier this year.

Also on Thursday, company officials outlined a new plan for increasing profitability and reducing costs across the company. The plan includes a modification of product designs as well as changes to back-office systems. The goal is to improve the companys operating margin to 25 percent by the middle of 2005, Samenuk said.

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