Network Associates International said the recent sale of its Sniffer business to two private equity firms doesn’t change anything for resellers here and can even improve their situation.
Jack Sebbag, Network Associates Canadian general manager, said most Sniffer partners have been focused in
the network management marketplace anyway. “”The companies that are taking it over are going to focus and improve on the products, improve on the quality and further develop the application.””
Sebbag added that Network Associates might not have been putting enough focus on the Sniffer line of network management and analysis products. “”(Resellers) are excited there’s an organization that’s going to put some money into the Sniffer product and continue to move it forward.””
The Sniffer product line will be sold to Silver Lake Partners and Texas Pacific Group for $275 million in cash. The sale, which is expected to close sometime in the third quarter, is part of the Santa Clara Calif.-based firm’s new strategy to trim its business and concentrate on security products and services to better compete in the security marketplace.
In addition to the Sniffer sale, Network Associates also announced a cost reduction and profitability plan, which has been under development for several months, designed to deliver a 25 per cent operating margin by mid-year 2005. For its first quarter ending March 31, 2004, Network Associates reported an 11 per cent increase in revenue. Consolidated net revenue was $217 million.
To achieve this goal the firm will redesign internal back office systems, modify product designs and modify Web services to its reseller and distribution partners.
Sebbag said the first thing was to “”rationalize”” business units that were profitable, such as Sniffer. The company is also aiming to be more channel oriented across North America and not just in Canada. “”That’s going to reduce the additional costs by having the reseller channel be the feet on the street to the customers.””
Sebbag also said the company has hired consultants to help it evaluate its headcount. While he doesn’t know which departments will be affected, Sebbag says the quality of Network Associates core products and services will not suffer.
Prior to Sniffer, Network Associates had a help desk software company called Magic. Sebbag said neither Sniffer nor Magic was focused on the security market. “”Those organizations didn’t allow us to focus and concentrate on our core competency, which is the security marketplace. Having removed both Magic and now Sniffer, McAfee will be able to focus on and further improve on applications,”” he said, citing a new spam-killing product that the company is currently working on.
Following the completion of the Sniffer transaction, Network Associates will change its name to McAfee. Sebbag said, “”It’s certainly the most recognizable brand name of our organization.””
John Cash, senior manager of Mississauga, Ont.-based IT service provider and Sniffer partner, Cyberklix Inc., also said it was the right decision. As a former Pricewaterhouse Coopers (PwC) employee, he compared the situation to when Coopers & Lybrand acquired Pricewaterhouse. “”The reason why they kept Pricewaterhouse was the name recognition based on the Academy Awards,”” he said. “”Network Associates is McAfee to 99 per cent of the world.””
Cash is optimistic about Network Associates direction for resellers. “”We look at it as a good news story because what it does is allow the Sniffer team at Network Associates to focus exclusively on that product line.””
Speaking on behalf of Cyberklix, one of 120 Sniffer partners across the country, he said Network Associates is “”taking pains”” to keep things smooth with minimal impact to clients. Cash is confident that partners like Cyberklix won’t be abandoned.
“”They’ve always been channel focused and I know that’s going to continue,”” he said. “”What it comes down to is the demand of public markets require quarterly, monthly, probably weekly numbers to be met. When you no longer have those market imperatives, you end up being able to maintain price points.””