Cisco Bolsters Security Presence with Sourcefire Acquisition

by Matt Klassen on July 24, 2013

In an effort to bolster its ever-weakening position in the network security market, Cisco Systems announced yesterday that it has purchased security firm Sourcefire. Although paying a steep price for the security firm, Cisco is optimistic that Sourcefire’s next generation cyber-security systems will allow it to provide better securities services in an age where mobile technology and cloud computing are on the rise and hackers always seem to be one step ahead.

It’s a different world out there than it was a decade ago, one that Cisco has struggled to adapt to over the last several years. With the rise of Web applications, social media, and cloud computing, the network hardware manufacturer has found itself on the outside of the security market looking in, unable to compete with the likes of Alto Networks and Check Point—both of whom have shown their ability to provide complex firewall options for today’s ever-changing technology scene.

But given the staggering number of acquisitions Cisco has made over the past year, its clear the company feels it can evolve to meet the needs of this changing market, leaving the only question unanswered whether or not this is all money well spent.

According to the terms of the agreement, Cisco will pay Sourcefire shareholders $76 per share in cash, a whopping 20 percent premium based on Monday’s closing numbers, a grand total of approximately $2.7 billion. While some might think that Cisco overpaid for the security firm, the investment is part of Cisco’s larger plan to become a viable competitor in the network security market, a rapidly growing field given the ever-evolving nature of cyber-threats.

“Cisco wants to be the top player in security and shed its reputation of lagging in that area,” Christopher Young, senior vice president, Cisco Security Group, told analysts on a conference call. Adding that, “The notion of the ‘perimeter’ no longer exists and today’s sophisticated threats are able to circumvent traditional, disparate security products. Organizations require continuous and pervasive advanced threat protection that addresses each phase of the attack continuum.”

That said, don’t expect Cisco’s network security rivals to sit idly by while the network systems giant bolsters its security presence, as analysts predict this Sourcefire acquisition could spark a rash of similar acquisitions, as “larger technology players such as IBM, Juniper, Symantec, and EMC could look to acquire smaller security players to help drive growth given the high priority security has in IT spending.”

As I said, it’s a different world out there then it was a few short years ago, with the proliferation of web applications, social media, streaming video, cloud computing and mobile technology creating an ecosystem of complex network security protection needs. It was really just a matter of time before network companies like Cisco realized the money to be made by bolstering their presence in the network security market, and look for this to be the first of many moves in this direction.

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