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McAfee Spinoff from Intel Will Face Challenges

The IT security software landscape has changed quite a bit since Intel acquired McAfee Software back in 2011 for $7.7 billion. After rumors that Intel was considering exiting the security software business surfaced earlier this year, the company this week pulled the trigger, agreeing to sell a controlling 51% stake to private equity firm TPG for $3.1 billion in cash while retaining 49% in the new company (which will bring back the original McAfee name).

By spinning out Intel Security, the company claims it values the new business at $4.2 billion or just over half what it paid for McAfee. That valuation stems from a $1.1 billion commitment by TPG to invest in McAfee, which Intel says will create one of the largest "pure-play" cybersecurity providers. Intel insists this is not a retreat from the security business, which does have merit, giving the stake it's retaining.

"Security remains important in everything we do at Intel and going forward we will continue to integrate industry leading security and privacy capabilities in our products from the cloud to billions of smart, connected computing devices," said Brian Krzanich, CEO of Intel, in a prepared statement announcing the spinoff. "Intel will continue our collaboration with McAfee as we offer safe and secure products to our customers."

In this week's announcement, Intel pointed to last fall's Focus conference in Las Vegas where the security group outlined its strategy to extend its portfolio and ecosystem. The company outlined a number of key areas of focus including its new endpoint threat detection and response platform, its new push into continuous monitoring and its new orchestration tools.

The company also discussed its Threat Intelligence Exchange (TIE), based on its McAfee Data Exchange Layer (DXL), which the company describes as its "architecture for adaptive security." Last year's Focus event, which I attended, also was an introduction for a new executive team led by Chris Young, who had headed Cisco's security business and this week was named as the CEO of the new McAfee business after the spinoff is completed in the second quarter of next year.  

As I reported, analysts at the event said Intel Security was making progress, but the company needed to shore up in the area of analytics tools. In a letter to customers and partners, Young said the move will help the company address the entire threat defense lifecycle. "As a pure-play provider, McAfee will accelerate the rate of innovation in delivering an integrated portfolio that is increasingly automated and orchestrated," Young said.

However, McAfee may face a challenge from its founder, John McAfee, who earlier this year became CEO of MGT Capital, which acquired assets of has file suit in the U.S. District Court for the Southern District of New York, asking the court for a judgment declaring the misuse of "their use of or reference to the personal name of John McAfee and/or McAfee in their business," as reported by PCWorld.  

Of course, John McAfee is no stranger to controversy having famously became a fugitive years later after police near his home in Belize wanted him for questioning following a murder at a neighbor's home. McAfee, who fled to Guatemala before returning to the U.S., is no longer wanted for questioning in regard to that case by Belize authorities and he earlier this year gave his side of the story, published by Business Insider. Last year McAfee announced he was running as Libertarian candidate for President of the United States.

Posted by Jeffrey Schwartz on 09/09/2016 at 1:03 PM


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