
Intel to buy McAfee for $7.7 Billion - kvs
http://dealbook.blogs.nytimes.com/2010/08/19/intel-to-buy-mcafee-for-7-7-billion/?hp
======
cryptoz
Why would they do this? It seemed obvious to me than in 5-10 years Antivirus
software would be obsolete and unnecessary. I hear people every day
recommending Windows 7 users get Microsoft Security Essentials and nothing
else. And personally I run Ubuntu, so I haven't thought about antivirus
software in years...

This seems like a very odd decision to me. Intel, a world leader in processor
design, does not need to get into such a sleazy business as antivirus
software.

Why not spend that $7.7 billion helping the world write better code?

~~~
xpaulbettsx
I'm definitely biased as a MS employee, but I can't underscore enough MSE as
an Antivirus solution - it's the least annoying AV on the market and has the
least perf impact on your system. Literally, you install it and it only
bothers you when it absolutely has to.

~~~
sahaj
can you convince my workplace to dump Symantec and start using MSE?

~~~
wazoox
Probably not; sane people dropped Symantec around the time when norton 2000
came out.

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jakarta
I think this is indicative of a real risk we will see with large corporations
right now. Many of these large cap companies have huge cash hordes and are
being pressured to do something with it. The risk is that the cash will be
used stupidly to do poor deals and I think the market is indicating that this
McAfee deal is a bad one.

Their shareholders would have probably been better suited with a special $7B
dividend instead.

~~~
Marticus
Not necessarily - I think it has the potential to be a very good move for
Intel.

I thought about my last post more, and I can think of a few applications where
it could give Intel some huge advantages.

Something that came to mind: We all agree that AV software eats CPU cycles.
What's to say Intel can't just start putting custom hardware that is designed
solely to offload signature checking onto a separate chip? With the increasing
sizes of detection databases (anomalies, threats, etc), eventually it will get
to a point where the typical CPU cannot feasibly cross-reference known threats
AND perform proactive checking in a fast enough environment to make it useful.

Not to mention network detection via the same means. Pretty soon you will be
seeing motherboards or at least CPUs that have other dedicated hardware to
checking signature sets on an extremely fast basis versus having to try and
mix other, non-security-related cycles with what I'll call "user" cycles.

~~~
InclinedPlane
No thank you! AV software is not security, it's a stopgap measure for when you
have to "do something" but are too lazy to implement real security measures.
And McAfee is one of the lowest quality AV vendors out there (remember when
they pushed out a definition update that made XP instances unbootable? that
costs a lot of people a lot of headache, and millions of dollars).

~~~
noonespecial
Agreed. Just wait till they push the signature to the flash om some special
chip that calls a vital windows binary a virus. Not only will you not be able
to boot, you won't even be able to reinstall, or pxe-boot, or run a live cd...

Thats one deep rabbit hole.

~~~
InclinedPlane
Aye. And imagine how much damage false-positives can have on smaller software
companies. A company like MS runs all of its binaries through the major virus
scanners as a matter of course for any release build, not just to check for
viruses but to make sure that they don't get tagged by a broken heuristic
detector or some such. But not every company has that luxury (and even so, it
didn't save XP from McAfee's blunder).

Besides which, all AV amounts to variations on turd polishing. You'll never
achieve robust security through black-list methods.

------
omouse
This makes perfect sense and will further drive us to buy more and "better"
hardware. The software will slow down the comp so much so that you'll want to
continually buy new hardware in the hopes of making things run faster! Intel
is an evil genius.

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mnemonicsloth
...for a 60% price premium.

Right now, large companies have so much cash available to them, on such
attractive terms, that acquisitions don't have to be a terribly good fit to be
attractive. It's just time to buy.

~~~
eru
How about paying dividends?

~~~
_delirium
I think there's a bit of an agency problem on that one. Paying large dividends
to return cash is sometimes a good choice for investors, but some executives,
especially in tech, see it as some kind of failure: you're doing the opposite
of an IPO, giving money back because you admit you don't know what to do with
it! A bold new move is more interesting from an empire-building point of view.

~~~
rphlx
No wonder the only winners are usually the banks and legal advisors, and
sometimes senior management at the acquired company. As an INTC shareholder I
am pissed about this. A 60% premium? WTF.

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pvdm
Lost all remaining respect for Intel with this bone-headed move. McAfee and
Intel headquarters are within walking distance of each other. Perhaps the CEOs
met for a few drinks at Birks and decided to do this. Make absolutely no sense
at all.

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jsz0
Intel just bought Texas Instruments cable modem division so maybe they're
looking to make a big push into the CPE market? x86 all-in-one gateways with
embedded security & AV scanning perhaps? McAfee has tons of deals with ISPs so
this would be a big foot in the door for Intel to push not only IP gateways
but other types of set tops too. $7.7B is a big price tag but if my theory is
correct you need to look at it in perspective of how many CPE devices are sold
per year -- cable modems, routers, set tops. Presently they're all using ARM,
PPC or MIPS chips. That's a huge potential growth area for low power x86.
Wouldn't surprise me to see Intel pickup Motorola's set top business in the
near future.

------
jdavid
If Intel bought this in CASH, that would be silly, most likely they took our a
low interest rate loan and used the cash to back it.

The fact that deals like this are happening means that the gloves are off and
companies are not bunkering in anymore for a nuclear winter.

Also since this is just into 3rd qtr, this means that the company is not
worried about 4qtr reports, this is clearly a sign of getting a head start on
growth. I wonder how long the integration will take, 3 months would put in in
4qtr with something for Christmas?

What other software could Intel be looking at?

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gamble
It's always interesting to see the business press scratch its head after
baffling acquisitions like this and try to spin a coherent explanation of how
the two companies fit together. The same thing happened when eBay bought
Skype, but wishing didn't make that deal logical either.

------
epynonymous
i think i speak on behalf of many here: WHAT... THE... FUK?!?

that's like trojan buying a porno studio, sure they're in a related field but
where the heck is the synergy?

------
alexdong
I found this article[1] provides an interesting explanation: Intel is trying
to integrate anti-virus software into mobile devices chips so that they can
catch the mobilization wave. Feels quite similar to Intel's acquisition of
many other vertical chip makers[2].

Now, how this is valued is something I still don't understand. Will this be
another EBay-skype type of acquisition that'll end up break up again?

[1]: [http://uk.finance.yahoo.com/news/intel-looks-to-secure-
mcafe...](http://uk.finance.yahoo.com/news/intel-looks-to-secure-mcafee-
takeover-ftimes-c6e0e029015c.html)

[2]:
[http://www.google.com/search?hl=en&tbs=cdr%3A1%2Ccd_min%...](http://www.google.com/search?hl=en&tbs=cdr%3A1%2Ccd_min%3A1%2F1%2F2000%2Ccd_max%3A1%2F1%2F2009&q=intel+acquire+chip+maker&aq=f&aqi=&aql=&oq=&gs_rfai=)

------
teyc
Intel's fortunes are closely tied with Windows. With the rise of the ARM
devices, decline of Windows, AND having other x86 manufacturers closing in,
Intel has to pivot.

Security is a nice subscription business to be in. The nature of security
business is essentially a fight between the providers and the malware
publishers. As the computing platform fragments again, you need to be a large
company to comprehensively support multiple kinds of devices.

As we start to see more netbooks, slates, smartphones deployed across the
enterprise, each device presents Intel another opportunity to make money on a
chip it didn't have to manufacture.

------
pointillistic
Could you please tell me if technically you can have security hardware based?
Apple now competes with Intel, even in hardware. Would it make sense for Intel
to have a "more secure" processors?

~~~
dododo
there's already a lot of hardware-based "security" out there. for example:

* <http://en.wikipedia.org/wiki/Trusted_Platform_Module>

* <http://www.intel.com/technology/anti-theft/>

* <http://en.wikipedia.org/wiki/NX_bit>

and so on, of which Intel is currently involved with lots.

Security is what a desktop processor spends a lot of it's time doing: making
sure programs are isolated from one another and the kernel whilst still
executing code.

~~~
rwmj
vPro as well, which I strongly suspect is what this is about.

Intel want to put AV underneath the operating system (ie. under Windows),
using their virtualization technology to make it invisible to the OS. This was
one of the ideas behind their "failed" vPro project[1].

[http://en.wikipedia.org/wiki/Intel_vPro#Security_and_Intel_v...](http://en.wikipedia.org/wiki/Intel_vPro#Security_and_Intel_vPro_PCs)

[1] Yes, I know vPro didn't "fail", but parts of it did, including an earlier
attempt to shovel AV under the OS.

------
jacquesm
What we need is operating systems that are escalation attack proof, not
hardware based anti-virus.

I was hoping something like this would break through:

<http://en.wikipedia.org/wiki/Capability-based_security>

Not that I've bought any anti-virus stuff since we stopped using Microsoft. In
fact, the anti-virus stuff was a good part of the decision to quit using
microsoft completely. It turned perfectly good computers in to space heaters.

------
azim
I don't think we'll see any change to AV on the desktop. That's not a fast-
growing market. Enterprise-grade security "in the network" on the other hand
is a multibillion dollar market, and growing fast. Signature-based detection
is still the premier way of blocking threats like email spam and malware. In
order to scale to the higher bandwidths that today's networks run at, it's
necessary to use purpose-built hardware for network and regex processing.

------
Groxx
Heard via NPR this morning: Intel stocks are down a few %, while McAfee is up
_over 50%_.

Seems investors think this is better for McAfee than Intel, too.

~~~
secret
Intel offered 60% more than McAfee was worth yesterday. Basically if you buy
MFE now (up 57% as I write), you're essentially just buying a bond with a 3%
return between now and when the stock switches to Intel. Of course, there's
always a chance the deal isn't completed for whatever reason.

As for Intel going down, I would sell too. I don't really see how this deal
makes sense.

~~~
afterburner
The purchaser's stock typically goes down because the company just spent a lot
of money... whether loaned or not.

~~~
secret
Very true. My point was that this just seems like a bad idea to me, and it
would scare me from holding the stock if management keeps making deals like
this.

------
nivertech
Maybe Intel needs more office space in Santa Clara? ;) What does it make a
price per sq. foot for McAfee office space?

Also by acquiring a company with $2B revenues (and only $173M net profit) -
they can do a lot of "creative accounting". The kind of large corporations
usually do at the expense of shareholders and taxpayers...

------
nivertech
Off-course buying $MFE is better investment for $INTC, than Itanium or
Larabee, but for this kind of money they better buying $NVDA or $ARMH

<http://twitter.com/nivertech/status/21696999486>

------
xl-brain
Does anyone know if this has to go through shareholder approval? Maybe there
is a chance we can defeat this. I'm a shareholder and I'm considering dumping
the stock. I haven't seen anything this bad since the AOL/TimeWarner debacle.

------
yuxt
Meanwhile, Plagued by Lawsuits, McAfee Founder Hunts for Cures in Belize
<http://www.fastcompany.com/magazine/145/fantasy-island.html>

------
naturalized
Good news for AMD and ARM that Intel is getting diluted with irrelevant stuff!

------
Maven911
talk about being overpriced... i guess the bankers knew how to negotiate

~~~
larsberg
"advised by Goldman Sachs"

Who wants to bet Goldman took a large, long McAfee position in the last couple
of days? From an unrelated portion of the company, performing usual hedging
activities, naturally :-)

~~~
blantonl
You might want to brush up on the Glass-Steagall Act, which expressly
prohibits these types of activities within organizations. i.e. ... "The Wall"

And with Goldman under the regulatory microscope right now, I bet they are on
the straight and narrow.

~~~
jbooth
The glass-steagall act which was repealed in the late 90s and which many
people point to as the key piece of deregulation that kicked off the housing
bubble?

~~~
yeahright09
Yeah, they are definitely on the straight and narrow, I will tell you that
much. And that is the reason we know that our regulatory system is beyond
broken. Goldman probably put up the loan for the deal and maneuvered it all
into place, because naturally their advisory services are in synergy with
their other products.

------
borisk
Intel exec Renee James discusses goals for McAfee (Q&A) -
<http://news.cnet.com/8301-13924_3-20014160-64.html>

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robg
Can anyone tell me why? It seems like a poor fit.

~~~
konad
AV eats CPU cycles, Intel sells CPU cycles. That do ?

~~~
paraschopra
Lots of stuff eats CPU cycles, Intel surely cannot acquire all of it.

~~~
lallysingh
How many other products make _everything_ _else_ on the computer substantially
slower?

~~~
adamhowell
Windows?

------
clofresh
Maybe we can get hardware-level virus checking instructions so that scans
don't take so freakin' long.

~~~
loewenskind
Good lord, please no! We need to make viruses so slow and painful that every
OS designer _must_ make their OS resilient to them. This is a stupid problem
to have at all, the last thing we want is to bake in into the bloody hardware!

------
MikeCapone
I'd have taken a dividend check...

------
pcestrada
Maybe Intel hopes to extend their 'Intel Inside' campaign to include anti-
virus protection?

~~~
eru
Didn't they stop that campaign years ago?

------
dreaming
First thought: overpriced

------
sabat
The Onion had this strangely prophetic article about 10 years ago:

 _Just Six Corporations Remain_

[http://www.theonion.com/articles/just-six-corporations-
remai...](http://www.theonion.com/articles/just-six-corporations-remain,551/)

------
mkramlich
Intel + McAfee doesn't seem like a good fit. Also, McAfee's cash cow has been
the Windows installs it effectively patches with extra "security". Seems like
that market does not have a rosy future, compared to alternatives like Mac and
Linux. So weird time to make a bet on the future of Windows security add-on
demand.

Struck me a bit like when Ebay bought Skype. I had to really strain my brain
to come up with a way that deal made sense.

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c00p3r
Seems like a management misunderstanding, or they really believe in a long
life of MS. Even their own MeeGo (which is just a bunch or rpms) doesn't
require any proprietary security solution, leave alone Android.

Of course, they could create and start to push some artificial, unnecessary
security framework, but to whom? Some mobile Windows 7 on Atom I guess.. ^_^
which obviously a born-dead platform, same as this MeeGo.

------
auxbuss
Came over to HN for answers to this WTF. But even here we have none.

AV is snake oil. What do Intel have in mind?

~~~
auxbuss
Why is this voted down? It's true, no-one here has a coherent, rational
understanding of why Intel has made this move. Everyone is asking why and no-
one can comprehend the move. Nothing wrong in that. Either Intel has a crafty
powerplay or they are off plan.

Surely the issue isn't calling AV snake oil. Really. In this audience?

