There is little confusion about McAfee
Since 1996, Citadel has developed software to help companies protect their networks. Its flagship product, Hercules, deals with vulnerabilities across systems based on Microsoft
Yet Citadel is a small business. For the first six months of 2006, revenues increased from $4.4 million to $8.3 million. But there was a net loss of $3.2 million.
McAfee will spend $56 million in cash plus $4 million in working capital reimbursement to buy out Citadel. For a company the size of McAfee, this is a small-price deal.
But McAfee will certainly acquire valuable technologies. I interviewed Nick Selby, who is a senior analyst and head of the security practice at The 451 Group. "Now we're watching a trend merging management functions, and this deal speaks to that," he told me. "Citadel's patch and remediation management will integrate well with other McAfee products, specifically including its vulnerability assessment line -- acquired from Foundstone -- and compliance audit and reporting capabilities, which [were] acquired in the June purchase of Preventsys."
In other words, McAfee is continuing to evolve its product offering, which is necessary in the dangerous world of security. And with the many recent security breaches in corporate America, products that deal with network security should be in high demand for the long term.
Unfortunately, the stock price of McAfee still has a lot of baggage. That is, Microsoft is getting much more aggressive with its own security offerings. In fact, recently McAfee and Symantec
The ad, in fact, could just as well be viewed as a warning for McAfee shareholders.
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McAfee is a former Motley Fool Stock Advisor selection. Symantec and Microsoft are Motley Fool Inside Value picks. For more of lead advisor Philip Durell's low-risk, high-reward recommendations, check out Inside Value free for 30 days.