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Network Associates plans to sell off its Sniffer family of network management software and change its name to McAfee part of an effort to cut costs and boost profitability by focusing squarely on security products and services, the company says.
Network Associates plans to sell the Sniffer assets for $275 million in cash to Silver Lake Partners and Texas Pacific Group. The private equity firms will turn the Sniffer business into a new, stand-alone company called Network General, which will continue to develop, support, and market the products, according to a statement.
The companies expect the sale to close in the third quarter, subject to regulatory approvals, at which time Network Associates will change its name to McAfee. It considers McAfee to be a better known, more powerful brand than Network Associates, says George Samenuk, the company's chairman and chief executive, in a conference call with media and analysts this week.
The goal of the changes is to streamline the company around security products and boost operating margins to 25 percent by mid-2005, Samenuk says. To achieve that goal, Network Associates is also rearchitecting its backend systems and revamping its channel program, he says.
Product Plans
The Sniffer products, which are used by businesses to manage the performance of networks and applications, had not been meeting targets for profit and growth, Samenuk says. They are the company's last remaining products not related to security, after it sold its Magic line of help desk and management products to BMC Software late last year.
"It's our goal to minimize as much as possible the transition issues faced by our Sniffer customers. Most of the large McAfee customers are also Sniffer customers, so we want [the new company] to be wildly successful," Samenuk says.
The Sniffer group employed between 450 and 500 people, or 15 percent of Network Associates' workforce, and the majority will become part of Network General, Samenuk says.
"The strategic steps we are taking now will create a company that is well positioned to capitalize on the high demand in the security business," he says.
The name change brings Network Associates full circle. Once upon a time it was called McAfee Associates. In 1997 McAfee Associates merged with Network General--the name being given to the new Sniffer business--and the new company became Network Associates.
