Cisco to Buy IronPort Systems for $830 Million

Jan. 4.07 | About: Cisco Systems, (CSCO)

In a bid to tap burgeoning demand for security software, network equipment giant Cisco Systems will buy Web messaging and e-mail security firm IronPort Systems Inc. for $830 million. Cisco, which is predominantly a manufacturer of routers and switches, is on a hunt for niche technologies to add to its product line; the purchase follows nine smaller acquisitions by Cisco over 2006. IronPort's claim to fame is its "reputation filters," which block spam by sifting through senders' records. IronPort had considered an IPO but ultimately decided that Cisco could give it access to a wider array of potential clients. IronPort's current client list is primarily large technology, media and financial services firms, but it wants to expand into the business market. The purchase puts Cisco into direct competition with Symantec, the world's security software leader. The Web messaging security market is growing at about 25% a year, with global spam volumes roughly doubling year-on-year. The security software industry continues to consolidate: two years ago, Symantec bought Brightmail, while last year, Microsoft bought FrontBridge.

• Sources: Bloomberg, Reuters
• Related commentary: Cisco Shares Rise on Strong F1Q07 Profit Report, Analysts More Confident in Cisco, Cisco's Scorched Earth Policy Claims Another Victim, The Ten Best Tech Stocks Of All Time. Conference call transcripts: F1Q07 (Qtr End 10/28/06)
• Potentially impacted stocks and ETFs: Cisco Systems, Inc. (NASDAQ:CSCO). Competitors: Check Point Software Technologies (NASDAQ:CHKP), Symantec (NASDAQ:SYMC), Avaya Inc. (NYSE:AV), Juniper Networks, Inc (NYSE:JNPR), Nortel Networks Corp. (NT). ETFs: Internet Architecture HOLDRs (NYSE:IAH), iShares S&P Global Technology (NYSEARCA:IXN), iShares Russell 1000 Growth Index (NYSEARCA:IWF), iShares Russell 3000 Growth Index (IWZ)

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