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Putting the "Intel" in "Military Intelligence"

By Rich Smith – Updated Apr 6, 2017 at 11:19PM

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The Pentagon's cybersecurity spending spree has an obvious winner.

Will President Obama finally do something about the wave of hack attacks on the Internet? Will the government get serious about cybersecurity? This week's budget wrangling on Capitol Hill gives us hope that he is, and it will.

Earlier this week, the U.S. Department of Defense announced plans to spend $500 million to upgrade its ability to defend cloud-computing networks and encrypted data from Internet sneak attacks. The most novel aspect of this effort may lie in how the Pentagon is maneuvering to head off the threat.

Arguing that the Internet is a private phenomenon, and that private companies are better suited to improve and defend it than are the nation's generals, the Pentagon plans to subcontract out to companies better-suited for the task. Specifically, the Pentagon has asked DARPA to begin doling out funds as "seed capital" to tech companies willing to work up new ways to hack-proof the Internet. 

When last we discussed this issue, I mentioned that in past planning, the government has usually defaulted to throwing money at the nation's defense contractors -- Raytheon (NYSE: RTN), and L-3 Communications (NYSE: LLL), Lockheed Martin (NYSE: LMT), and other usual suspects. But I also mentioned that other companies might be even better suited to the task.

It seems the Pentagon has reached the same conclusion. It's already held sit-downs with Intel (Nasdaq: INTC), Google (Nasdaq: GOOG), and Microsoft (Nasdaq: MSFT) to brainstorm solutions to the hacking threat. Among other findings, the Pentagon seems to agree that one key is to deploy "both hardware and software" defenses against hacking.

Foolish takeaway
Hardware and software, you say? Hmm. Now what do you think of Intel's decision to buy McAfee? And how much longer do you think it will it be, before someone notices that Symantec (Nasdaq: SYMC), at less than 10 times free cash flow, is looking right tasty -- and located dead center in the middle of a Pentagon spending spree?

How will Symantec react to the latest news at the Pentagon? Add the company to your Fool Watchlist, and you won't miss a beat.

Google, Intel, and Microsoft are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers pick. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended a diagonal call position on Intel. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Google, L-3 Communications Holdings, Lockheed Martin, Microsoft, and Raytheon.

Fool contributor Rich Smith owns shares of Google. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

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Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$237.92 (-1.27%) $-3.06
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$98.74 (-1.40%) $-1.40
Intel Corporation Stock Quote
Intel Corporation
INTC
$27.52 (-1.96%) $0.55
NortonLifeLock Inc. Stock Quote
NortonLifeLock Inc.
NLOK
$20.67 (-2.82%) $0.60
Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$413.07 (-2.13%) $-9.01
Raytheon Company Stock Quote
Raytheon Company
RTN
L3 Technologies, Inc. Stock Quote
L3 Technologies, Inc.
LLL

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