Cisco Systems is buying messaging security firm; Tech giant paying $830 million for IronPort Systems
January 5, 2007
Cisco Systems took a big leap into the $2 billion messaging security market Thursday after agreeing to purchase San Bruno's IronPort Systems Inc. in a cash-stock deal worth $830 million.
IronPort is the second-largest private company acquired by Cisco, which continues to move beyond networking and into applications like antivirus and anti-spam software.
Cisco, already the largest provider of computer networking equipment, has also led the $5 billion network security market with about a 40 percent share globally. IronPort has been one of the major forces in the much more competitive and emerging messaging security market.
Cisco executives said the acquisition will bolster the company's already robust security portfolio and helps it keep pace with the continuing growth of e-mail, instant messaging, text messaging and Internet telephony.
"We've been looking at the market for messaging security and this was a natural adjacency for us, and IronPort was clearly a leader in this emerging market," said Mick Scully, vice president of product management in Cisco's Security Technology Group. "We looked at the acquisition of IronPort as making a strategic investment in the high-growth messaging market."
The acquisition allows Cisco to incorporate IronPort's technology into its network security infrastructure and gives the San Jose company access to IronPort's more than 3,000 customers. IronPort, which uses layers of application and network-based analysis to weed out spammers, stands to benefit from the deal by tapping Cisco's vast networking expertise.
"We looked at the network piece of (our business and realized) there's no one that knows more about network security than Cisco," said Tom Gillis, senior vice president of marketing for IronPort. "That's where we see the heart of the opportunities working together."
Analysts said the deal, while not a steal for Cisco, makes good strategic sense.
"Cisco has been trying to break out of the purely network world and get into the application space," said Paul Stamp, an analyst with Forrester Research. "If you look at two applications that everyone uses, it's e-mail and the Web. Really working to secure those applications is part of Cisco's strategy."
Analyst Zeus Kerravala with the Yankee Group said Cisco picked a good time to get into messaging security.
"When you think of messaging uses right now it's person to person, but you'll see a rise in instant messaging and text messaging and messaging from machine to machine and machine to person," Kerravala said. "I think the amount and type of messaging will go through the roof through the next few years."
The purchase continues a string of acquisitions by Cisco in the past year. Last year, it purchased nine companies including set-top box manufacturer Scientific-Atlantic Inc. for $6.9 billion.
Provided it clears standard closing conditions, the deal is expected to be completed by the end of April. Founded in 2000, IronPort, which has 408 employees, will operate as a business unit in Cisco's Security Technology Group.
