Intel Buys McAfee 377
Several readers have noted that
Intel has agreed to buy McAfee, the computer antivirus software maker, for about $7.7 billion in cash. There is also a press release available if you are into that sort of thing.
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Intel Buys McAfee
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Our OS who art in CPU, UNIX be thy name. Thy programs run, thy syscalls done, In kernel as it is in user!
Re:What??? (Score:4, Informative)
Does McAfee offer other products of significant value
They have encryption software -- making those less CPU intensive (especially for cell phone and other mobile use) might actually be moderately useful.
Re:Wow, Intel jumps the shark (Score:3, Informative)
I would suggest putting it in a bank. What are they? Scrooge McDuck?
Re:Holy cow (Score:5, Informative)
I like truecrypt and MSE for windows systems myself but I am not an IT director.
Re:Wow, Intel jumps the shark (Score:2, Informative)
Revenue != profit.
GM had revenues in the 100+ billion range when it needed to be bailed out.
McAfee's net income was 172.21 million; at that rate, it would take over 50 years to make back their money.
Re:Uh (Score:3, Informative)
You will usually see thing like company purchased for $1billion in cash and $2billion stock.
Re:McAfee is crap (Score:3, Informative)
Re:mcafee corporate is better then the home ver (Score:5, Informative)
Yeah, I need to disagree. It slows things down on my work laptop. I so want to replace Mcaffee on this machine and use MS Security Essentials like I have at home. Microsoft actually put out an AV scanner that doesn't feel like a lead weight.
Re:Uh (Score:3, Informative)
Exactly. Cash, in this case, is compared to a stock swap or borrowed money. It just means that they paid out of pocket with their own real money. Ridiculously large stock swaps for acquisitions are normal when a stock is overvalued... it's difficult to "sell high" without falling afoul of insider trading rules, or killing the value of your stock. Stock-based acquisitions are one way to take advantage of the periods when your stock is overvalued. Paying with real money, on the other hand, usually means people are more serious about the valuation of the acquisition.
Re:Uh (Score:3, Informative)
"Cash" is a term that indicates that real money is changing hands (as opposed to stock). It does not imply physical currency, it can be a bank transfer or check (or in this case, probably many checks to individual stockholders). This is a very common usage in English, and I would not consider it a mistake in the summary.
Re:Uh (Score:3, Informative)
As an illustration consider the phrase 'to cash a check'.
I've heard a plain deposit called "put the check in the bank"; it's only "cashing" when the person making the deposit asks for currency back. But then my Walmart* Discover Card's "Cashback Bonus" does come in the form of $10 checks attached to the credit card bill.
Re:Wow, Intel jumps the shark (Score:3, Informative)
Put down the hashpipe, dude, and take a look at McAfee's balance sheet and cash flow:
http://www.google.com/finance?q=NYSE:MFE&fstype=ii [google.com]
They have total current assets of $1.5B, and total liabilities of $1.8B (I'm ignoring their total assets, because so much of it is in "goodwill" and I think that number is grossly overrated given the bad press they've gotten over the last few years). That means they have negative value of $300 million. Why would you spend $7.7 billion in cash to have a guarantee of losing $300 million???
Not to mention, their cash flow for this year so far has been horrible. For the first two quarters, they had a net gain of only $2.4 million, from a starting total current assets of $1.7B at the end of last year, of which $893 million was cash and short-term investments. That's a 0.2% rate of return, the same rate of return you currently get from six-month Treasuries. If whatever you're doing can't beat the risk-free rate of return, you need to do something else, pronto. Their CEO and CFO should've been fired months, if not years, ago. And Intel's board need their collective head examined for okaying this deal.
Re:Holy cow (Score:5, Informative)
Actually, Apple is the largest retailer of music. Also, they are doing their best to become the most important distributor for TV, Movies and eBooks. Apple sells about $5B per year in thru the iTunes Music/Apps/Movies/TV/Books Store and those sales are growing at about 25% per year. While that's only about 7% of their sales right now, it's growing steadily and likely to be about as profitable as the hardware businesses. It's also likely to equal or outstrip Mac sales within a year or two.
No, Apple is not primarily a distributor, but they are in line to become the biggest distributor. That scares the distribution competition because Apple can afford push down distribution margins to promote high-margin device sales. So, you're right they don't need the money from iTMS but iPhones and iPods and iPads aren't nearly as attractive without iTMS--that's part of what you buy when you buy the device.
And that's the difference. Intel doesn't NEED McAfee, whereas Apple can't really operate without iTMS. Intel might find a way to differentiate future processors by adding industrial-strength security to their chips by integrating AV and management suite facilities with specialized hardware, but Intel has always benefited from being the premiere supplier of open-platform technologies and they are forced to be that way both by the market and by regulation. If they change that significantly to increase margins, they may become vulnerable to attack on both fronts. To me, $8Bn is just too much for McAfee. I think they could have got the same capabilities for a lot less money. McAfee sells low-margin, crappy AV software. They earn a few hundred million a year. Intel earns 4x the return on investment in its existing business (relative to McAfee). Also, I believe the embarrassing products McAfee sells will dilute Intel's brand. In the words of Warren Buffett, as an INTC shareholder "I feel poorer".
Re:Lycos part deux (Score:2, Informative)
The meat of TFA
> Intel was advised by Goldman Sachs & Co. and Morrison & Foerster LLP. McAfee was advised by Morgan Stanley & Co. Inc. and Wilson Sonsini Goodrich & Rosati, P.C.
Re:Holy cow (Score:5, Informative)
Not only that, but I believe Intel owns Grisoft, which means they already own an antivirus package. I don't get what they're doing here.
Re:All part of their core business (Score:3, Informative)
Well, we could certainly define "the McAfee" to be that... - the length of time of one standard universe. Not much good, probably but...
I asked because although someone is likely to know that you were joking about "the Mcafee" many people do indeed consider a planck-second to be a limit instead of just some number derived from a bunch of other constants, or simple (theortetical) measurement of the passage of time.
Regards.
Re:Holy cow (Score:3, Informative)
Huh... I didn't know that Intel owned a big chunk (not all) of AVG (Grisoft renamed themselves at some point).
Assuming the Wikipedia is accurate, Intel (and partners?) bought 65% in 2001: http://en.wikipedia.org/wiki/AVG_Technologies [wikipedia.org]