Intel gobbles-up McAfee.
Hardly a monster in the mergers and acquisitions market, chip-maker Intel nonetheless gobbled-up security specialist McAfee this week, spending more than $7.5 billion(usd). Consistent with Intel’s initiative to manufacture high-performance circuitry for netbooks and hand-held devices, the move consummates a year-and-a-half collaboration between the two Santa Clara companies. Intel remains the world’s largest supplier of micro-processors for personal computers and servers.
Intel CEO Paul Otellini told reporters, “With the rapid expansion of growth across a vast array of Internet-connected devices, more and more of the elements of our lives have moved online.” Indicating his company’s new sense of direction, the chief continued, “In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences.”
After Otellini’s official announcement, an Intel press release elaborated the company’s reasoning. The statement reminded that security is now an essential element in online security, and users update their PCs’ anti-virus protection every day, but few have developed adequate defenses for other internet connections—mobile phones, ATMs, medical equipment, and automotive systems. Intel now will sell security software with new chips designed especially for those devices. The company expects its first security-enhanced chip to hit the market early next year.
Aware of the close collaboration between Intel and McAfee, industry analysts had anticipated the move for some time, and they generally endorsed the merger. “Good alone but better together,” Allyson Hilliard, Patterson-Forbes senior technical analyst quoted an old cliché, “The merger combines two industry leaders in a major undertaking, which, frankly, is somewhat overdue.”
Wall Street was not quite so bullish on Intel’s $7.5 billion expenditure. Moving to match share-prices with Intel’s handsome tender offer, buyers boosted McAfee shares 57% on Thursday; but Intel shares dropped nearly 4% on worries that first-year earnings will suffer in the big new company’s first year.
