Intel announced Thursday that it has agreed to buy the software security firm McAfee, for more than $7.5 billion. As Kristian Foden-Vencil reports, it's Intel's biggest-ever purchase and should help the company move further into the wireless world of smart phones.
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Before we get into the reasons behind Intel's move. First consider $7 billion -- cash.
If you were to count those dollars at the rate of one a second, it would take 11 days to get to 1 million -- that's without a break. To get to seven billion would take over 220 years.
Anyway, McAfee is best known for its anti-virus software.
Intel spokeswoman Suzy Ramirez says the hope is that by combining McAfee technology with Intel's hardware, the company will be able to make more secure wireless devices.
Suzy Ramirez: "We really just see an opportunity here to bring the software closer to the silicon and help Intel strengthen it's security to more effecitvely counter some of the increasingly sophisticated threats we're seeing today and in the future as well."
Ramirez says Intel staff is buzzing with Thursday's news.
Suzy Ramirez: "There's an initial head scratching what this means and why the hardware company would go after such a large software company in security of all things. And the you know the dollar amount associated with that."
But, she says, those employees come around quickly as they think about Intel moving into smart phones and mobile computer tablets. And the need for extra security for people who are essentially on line all the time.
Standard and Poor's analyst, Clyde Montevirgin, had the same reaction as many Intel employees.
Clyde Montevirgin: "We are a little bit confused about the strategic direction of the acquisition. However as we listen to what Intel has in store and how they plan in differentiating their chips, we can see the potential of this actually helping out in the longer-term."
Montevirgin says all the growth nowadays is in devices like iPhones, which give people access to the Internet all the time. He says people want all those apps -- so they can order a meal from a restaurant using a phone app without worrying about having their credit card number stolen.
And Intel, he says, wants a slice of that pie.
Clyde Montevirgin: "These markets they don't really have a lot of exposure to right now. They have a very low market share. They feel that by providing security on the chip level, for these devices that generally don't have a lot of security, that they could gain market share. And we'll see if they can do it."
At the moment, McAfee software is placed on a home computer -- to help people feel more secure about using a credit card there.
But smart phones and other mobile devices seldom have that kind of third-party security on them.
Montevirgin thinks that putting McAfee security on those mobile devices, could be a good move.
Clyde Montevirgin: "It's just a matter of how they market it and the type of product they'll create with the McAfee technology. And that's where we have to wait and see."
The deal is just the latest in a line of acquisitions sweeping through the high tech sector. Big established firms like Intel are buying-up smaller businesses that operate in those new faster-growing markets.
For example, Hewlett-Packard just bought Palm so it could get a slice of the smart phone market.
Today's announcement isn't even Intel's first acquisition this week. It announced Monday it will buy Texas Instrument's cable-modem unit for an undisclosed sum.
McAfee been told it will be operating as a wholly owned subsidicary -- basically as it did before.
On an Intel press release video, McAfee CEO Dave DeWalt, says he's excited.
Dave DeWalt: "The reputation of Intel is legendary. I mean I find the innovation, the research, the development the commitment over the years is fabulous. And for McAfee, we're pleased to be a part of that."
McAfee has 250 employees in Beaverton. An Intel spokeswoman says they'll stay where they are. She also says Intel doesn't expect any lay-offs at Intel as a result of the purchase.
Intel will pay $48 for each share of McAfee -- 60% more than Wednesday's closing price.
Intel says the deal has been unanimously approved by both companies’ boards of directors and is waiting to be cleared by shareholders and regulators.
