Microsoft Plans to Acquire Sybari
Microsoft Corp. said Tuesday that it intended to buy a company that makes antivirus and other security software -- much of it aimed at safeguarding against vulnerabilities in Microsoft products.
The acquisition of Sybari Software Inc. would be the software giant’s third such purchase in two years. That fueled concern that Microsoft was planning its own line of security programs.
“It would be an inherent conflict of interest,” said industry analyst Neil MacDonald of Gartner Inc. “It would be like the power company selling you flashlights and batteries. What motivation would they have to keep the power on all the time if they were making billions selling the emergency supplies?”
As if to underscore the point, Microsoft on Tuesday issued a monthly security update containing a flock of new security flaws in the Windows operating system, the Internet Explorer Web browser and other products. Most were termed “critical” in that they could allow the propagation of Internet worms.
Sybari, of East Northport, N.Y., makes software to protect company computer systems from viruses, spam and other threats. It was on the verge of going public. Microsoft didn’t disclose the price it agreed to pay for Sybari, which valued itself at between $163 million and $182 million when it filed for its initial public offering.
Buying Sybari would be the latest step taken by Redmond, Wash.-based Microsoft to acquire computer security technology. In 2003 Microsoft bought GeCAD Software, a Romanian company that made a desktop antivirus program, and in 2004 it acquired New York-based Giant Company Software Inc., a maker of anti-spyware software.
Microsoft, which has long been criticized for security flaws in its widely used software, also has recently released free antivirus and anti-spyware products on its website.
Share prices for two leading antivirus software companies were battered by the suggestion that Microsoft may become a competitor. Santa Clara, Calif.-based McAfee Inc. slipped $2.14 to $23.82 on the New York Stock Exchange, and Cupertino, Calif.-based Symantec Corp. fell $1.51 to $22.09 on Nasdaq. Microsoft shares were up 8 cents to $26.24 on Nasdaq.
Mike Nash, the vice president in charge of Microsoft’s security, business and technology unit, said the company would continue to develop Sybari products, which are largely aimed at spotting viruses within company e-mail networks.
Industry observers said that Microsoft Chairman Bill Gates might reveal more about the company’s plans for security software when he speaks Tuesday at an annual security conference in San Francisco.
Nash said it hadn’t been decided whether the acquisition would mean layoffs at Sybari, which employs about 250 people. Sybari executives declined to comment.
Microsoft mostly stayed out of the security business until the last few years, and increasingly other companies have profited by finding vulnerabilities in Microsoft software.
“Microsoft allowed a whole security industry to grow up around them,” said analyst Rob Enderle of Enderle Group. “It was in these security companies’ interest to point out as many problems as possible.”
Sybari was one of them. According to public documents filed in preparation for its aborted public offering, 95% of Sybari’s revenue since 2001 came from “at least one product designed to protect Microsoft electronic messaging and collaboration server environments.”
Symantec executives said its products, such as the Norton Antivirus program, work with several different types of operating systems. But half its business is in the consumer market, which is dominated by Microsoft operating systems.
Enrique Salem, the company’s senior vice president for network and gateway security, said Symantec, founded in 1982, had enough expertise in the field to weather possible competition from Microsoft.
“This is a business that changes very rapidly,” Salem said. “What matters is how quickly you can respond to provide a solution, and you get the expertise in that from long experience.”
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Reuters was used in compiling this report.
