Check Point Puts $586M on Security Table

Acquisition would be the 'first step' in overall data security plan
Posted November 21, 2006
By

Ed Sutherland


Check Point Software Technologies (Quote), known for protecting the desktop from Internet dangers, now says it wants to guard all data. And it will only cost the company $586 million.

Check Point said Monday it is wooing Sweden's Protect Data, owner of data security firm Pointsec Mobile Technologies AB.

Pointsec, which offers data-encryption products for cell phones, laptops and PDAs, saw its revenue hit $52.4 million during the first nine months of this year, with after-tax income nearly doubling over the same period.

The deal, although supported by Protect Data's board and the company's largest shareholder, must be approved by at least 90 percent of the shareholders, according to a statement.

"With businesses facing increasingly severe consequences from data breaches and a stricter regulatory environment, it is apparent that protection must extend beyond the infrastructure to the data itself," Gil Shwed, Check Point CEO, said in a statement.

A 2005 agreement to buy Sourcefire for $225 million was dropped after American regulators questioned the purchase of a supplier of security software to the U.S. by the Israeli Check Point.

Because Check Point is offering to buy a Swedish company, those concerns may not reappear.

"Check Point is looking at the same trends everyone else is," Andrew Jaquith, a Yankee Group security analyst, told internetnews.com.

Despite the many layers of internal security, companies are leaking data through the increased use of laptops, PDAs and wireless devices brought into the enterprise.

"It's not enough to have a big moat around your enterprise, because the moat has dissolved," Jaquith said.

The agreement will allow Check Point to offer customers stronger end-to-end security, according to the analyst.

Although with so many other data-encryption solutions available, including from the upcoming Windows Vista operating system, Check Point will need to integrate Pointsec's features into products, such as Zone Alarm, he said.

The move may be more driven by Wall Street expectations, rather than security, said John Pescatore of Gartner.

While Check Point hasn't been growing much lately, data-encryption vendors such as Protect Data are reporting strong profits, he said.

The news comes amid a series of consolidations by security vendors, which likely played a role in Check Point's decision.

IBM (Quote) in August bought Internet Security Services (ISS) for $1.3 billion.

Around the same time, storage giant EMC (Quote) acquired RSA Security for $2.1 billion.

Today's acquisition won't be the last, according to Jaquith.

This article was first published on InternetNews.com. To read the full article, click here.






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