Check Point Puts $586M on Security Table

Check Point Software Technologies , 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 today 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 in August bought
Internet Security Services (ISS) for $1.3 billion.

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

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

Standalone data-encryption companies, such as Safeboot, maker of mobile
data security products, and possibly PGP Corp,
are just some possible buy-out prospects, he said.

“Check Point’s not done,” he continued. “We’ll see a fair amount of deal-making.”

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