Cisco Adds E-mail Security For $830M

Leave it to one of the most acquisitive IT companies to start 2007 off with a bang.

Cisco Systems  agreed to purchase IronPort Systems, which makes appliances to quash spam and spyware, in an $830 million in cash and stock deal.

The IronPort appliances and associated security software will join Cisco’s threat mitigation, policy control, and management solutions, further fleshing out the company’s “self-defending network.”

“We feel there is enormous potential for enhanced e-mail and message protection solutions to be integrated into the existing Cisco Self-Defending Network framework,” said Richard Palmer, senior vice president of Cisco’s Security Technology Group.

Securing e-mail is a top priority for businesses these days, particularly with the proliferation of e-mail-based scams and viruses.

Corporations are especially responsible for protecting e-mail in the wake of new record retention regulations. Rules such as Sarbanes-Oxley, HIPAA and Basel II require companies to preserve the integrity of records.

Should the deal close in the third quarter 2007 as expected, Cisco will retain most of IronPort’s 408 employees.

The IronPort team and product portfolio will operate as a business unit in Cisco’s Security Technology Group, run by Palmer.

Cisco will enter a new realm of competition with IronPort; SonicWall, Secure Computing (which leapt into the fray last year by buying CipherTrust), Sophos, Seagate, MiraPoint, SurfControl and Tumbleweed all make appliances that combat spam and viruses, spyware, Trojans and worms.

Cisco will also compete with IT security powerhouse Symantec, which launched its line of e-mail security appliances two years ago this month.

The market can bear a lot of competition for the time being. IDC expects the market for messaging security gateway appliances to top $1.7 billion in 2009.

Cisco, an aggressive acquirer that has set its sights on IT markets in an attempt to broaden its portfolio, has been casually bulking up its security portfolio for years, particularly on the software side.

Four years ago this month, the networking giant agreed to acquire network security software maker Okena for $154 million in stock. In 2004, Cisco purchased Perfigo for $74 million in cash, adding network admission control products.

Just last year, the Cisco bought Meetinghouse Data Communications, a maker of wireless security software, for $43.7 million in cash and stock.

Those purchases, along with a successful IronPort bid, significantly bulk up Cisco’s security war chest.