Intel has just spent an outrageous amount of money buying a second-rate software security company called McAfee. Intel will destroy McAfee and then quietly sell it for pennies on the dollar in about five years.<\/p>\n
Can you think of any other technology product with less sex appeal than security? Fear of some vandal hurting your PC is a horrible marketing pitch.<\/p>\n
I’ve watched Intel for 30 years. I’ve tried to deal with them over the years. It’s been awful. I even tried to buy one of their failures — Dialogic — but they sold it quietly for pennies on the dollar with no auction, no negotiations — as though they were embarrassed about their failure and just wanted the eyesore out of sight.<\/p>\n
Suffice, I’ve never been an Intel shareholder and can’t see any reason to be one now. For your amusement, here’s today’s New York Times story on the unbelievable, outrageously expensive Intel takeover of McAfee.<\/p>\n
With McAfee Deal, Intel Looks for Edge<\/strong><\/p>\n SAN FRANCISCO \u2014 Hoping to accelerate its move into smartphones and consumer electronics, the chip maker Intel<\/a> has turned to security software and services as a way to separate its products from those of its rivals.<\/p>\n On Thursday, Intel paid $7.68 billion to acquire McAfee, one of the leading sellers of antivirus and other computer security software. The companies, both based in Santa Clara, Calif., plan to create tight links between Intel\u2019s chips and McAfee\u2019s security technology.<\/p>\n Such ties will be crucial as millions of products, including phones, cars and home appliances, gain more computing horsepower and access to the Web, according to the chief executive at Intel, Paul S. Otellini<\/a>.<\/p>\n \u201cThis will better protect Internet users and their devices,\u201d Mr. Otellini told Wall Street analysts.<\/p>\n Investors appeared flummoxed by the purchase, Intel\u2019s biggest ever, sending the company\u2019s shares down about 3.5 percent, to $18.90, in afternoon trading. McAfee shares rose 57.07 percent, to $47.01.<\/p>\n With the purchase, Intel is spending a huge chunk of the $12.2 billion in cash and short-term investments it had on hand as of last quarter. Analysts expect that other technology companies sitting on large cash hoards, like Microsoft<\/a>, Apple<\/a>, Cisco<\/a> and Google<\/a>, are primed to make more major acquisitions, though some analysts have urged the companies to give shareholders some of the money in dividends.<\/p>\n Analysts doubted that McAfee\u2019s business would have much near-term impact on Intel\u2019s bottom line.<\/p>\n Intel\u2019s fortunes are tied to PCs and the computer servers that go into data centers. As such, Intel, with revenue of $35.1 billion in 2009, goes through boom-and-bust cycles as demand waxes and wanes. McAfee, with revenue of $1.93 billion last year, sells a great deal of software on a subscription basis, which can smooth out financial results from quarter to quarter and year to year.<\/p>\n \u201cThere are no immediate synergies that I can see,\u201d said Stacy A. Rasgon, an analyst with Sanford C. Bernstein & Company. \u201cIt is a strategic deal, and it is a pretty rich price for a strategic buy.\u201d<\/p>\n Intel will pay $48 a share in cash<\/a>, a 60 percent premium over McAfee\u2019s Wednesday closing stock price of $29.93. The deal hinges on standard regulatory approvals.<\/p>\n Demand for McAfee\u2019s core security products should rise as people look to protect their smartphones, cars and Web-ready products from Internet threats, said David G. DeWalt, the chief executive at McAfee. Consumer electronics products like phones and hand-held gadgets face fewer threats than PCs, although it is expected they will be subjected to the same torments from hackers as they gain access to the Internet.<\/p>\n
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