Check Point Locks Down Intrusion Prevention

The market for security software continues to consolidate as Check Point Software Technologies agreed to buy intrusion prevention provider Sourcefire
for $225 million in cash and stock.

Check Point expects the purchase of Sourcefire to help flesh out its NGX
platform, allowing customers to take a proactive approach to security by
preventing known and unknown threats on corporate networks and applications.

The key Sourcefire product line in the deal to do that is the Columbia, Md.,
vendor’s Real-time Network Awareness (RNA) software for identifying
suspicious behavior on a computer network, said Gartner analyst John

“If you have these Sourcefire IDS sensors on your network, they can watch
all the traffic and tell you if a server is acting funny,” said Pescatore.
“That RNA capability has been one of the more interesting pieces of
Sourcefire for the past couple years. That’s a big part of what Check Point
is buying.”

Redwood City, Calif.’s Check Point will also benefit from hosting Snort, a
popular open source computer intrusion detection system created by
Sourcefire CTO and Founder Martin Roesch.

RNA, software programming talent such as Roesch and Sourcefire’s
customer base give Check Point a new revenue stream and a chance to compete
with intrusion detection leaders like Internet Security Systems and Cisco
Systems, Pescatore said.

This is important for a company trying to expand to grab more of the
seemingly limitless multi-billion-dollar market pie for security software, a
pie that gets larger with the passing of each new federal compliance

“Check Point sort of only had the firewall piece,” Pescatore said. “They
were not an intrusion detection company. So now they clearly have added for
themselves some pretty key pieces to compete with ISS [Internet Security Systems] and Cisco — who is
their biggest competitor — on the firewall side of Check Point’s market.”

Sourcefire’s RNA, Intrusion Sensor and Defense Center product lines align
perfectly with the company’s vision for internal security, said Check Point
CEO Gil Shwed on a conference call.

“The acquisition of Sourcefire is an important step in delivering this
expanded strategy by enhancing our set of attack prevention intelligent
technologies and providing the most comprehensive internal security
solutions portfolio,” Shwed said.

Shwed went on to say that the purchase typified Check Point’s evolving
security strategy, which has expanded beyond locking up computer firewalls
to offering perimeter gateway security software.

The deal, in which Check Point will assume Sourcefire’s stock-option plan, is
expected to close in the first quarter of 2006.

In related company news, Check Point narrowed third-quarter guidance. In July, Check Point said it expected revenues of between $140 million to $150 million.

The vendor said today that $140 million to $141.5 million is a more realistic figure on earnings per share of 31 cents to 32 cents.

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