Symantec VeriSign Deal Could Add Value, Partners Say

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Symantec announced a definitive deal Wednesday with VeriSign to acquire its identity and authentication business for $1.28 billion in cash, incorporating its SSL Certificate Services, Public Key Infrastructure, VeriSign Trust Services and VeriSign Identity Protection Authentication Service. Under the terms of the deal, which is expected to close in September, Symantec will acquire VerSign assets, including the majority stake in VeriSign Japan, subject to customary closing conditions such as regulatory approval.

The VeriSign acquisition gives the security giant market dominance in the SSL certificate space, which Symantec executives contend was one of the driving forces behind the deal. While perhaps not a significant revenue generator in and of itself, the acquisition would ultimately drive value by increasing cross-selling opportunities, executives said.

"We see a real opportunity to accelerate business because of the cross-sell opportunities," said Francis DeSouza, Symantec senior vice president of the enterprise security group. "A lot of the same people who buy SSL certificates from VeriSign are the same ones who buy critical protection from us."

DeSouza added that the acquisition would enable the company to integrate VeriSign's authentication technologies into its array of endpoint security and DLP products.

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"It furthers us strategically. We believe going forward, security will be much less device oriented and much more around information and people," he said.

And some partners said that the acquisition is one that will likely provide a strong value-add for security solution providers, particularly as Symantec transitions from offering a wide breadth of point solutions to comprehensive suites.

Feris Rifai, president of San Francisco-based Bay Dynamics, said that he had hopes that the acquisition "will eventually mean more opportunity for us to partner on with Symantec and provide value" in light of previous channel-centric integrations with Altiris System Management and Vontu's DLP technology.

"I think it's good news," said Sarah Merrion, managing partner for Conventus, a Chicago-based solution provider. "It's just really solidifying our security message. Symantec is traditionally centered on point solutions, and now they're expanding their focus to protecting the data as it travels between those. It's another piece of the security puzzle."

Merrion added that VeriSign's identity and authentication component, which comprises its SSL Certification business, would become increasingly necessary as more end users relied on their own commercial devices for use in the workplace.

"When you think about ideas of combining SSL with Symantec Protection Center, verifying identifies on different devices, whether it's a smart phone or iPad, that's absolutely going to affect what we're recommending to customers," Merrion said, adding that customers wouldn't have to go to another security vendor to get SSL Certificatation and other authentication technologies.

Others, however, are scratching their heads and wondering if Symantec is going to have trouble swallowing VeriSign following the serial acquisitions of encryption companies PGP Corp. and GuardianEdge last month. The purchase raises suspicions with some channel partners, many whom haven't forgotten the 2005 Veritas merger.

In the past, Symantec partners have said that company is still feeling the residual effects of the numerous structural and integration issues that began after it acquired Veritas in 2005, and later when it embarked on an ambitious upgrade to merge IT infrastructure from both companies around Oracle's ERP platform in November 2006. The combined company suffered most in the area of support, but was also inundated with purchasing and licensing problems after the company introduced new buying programs and changed its software licensing agreements.

"When I think back to the Veritas acquisition, that one threw me for a loop," Merrion said.

"Symantec has consistently shown that it takes them a long time to digest the companies they buy. They are still burping up remnants of the Veritas acquisition. And they just ate two encryption meals a few weeks ago. I don't have a real positive feeling about this," said Andrew Plato, President of Anitian Enterprise Security, based in Beaverton, Ore., via e-mail.

Meanwhile, Plato expressed strong doubts about the growth potential for SSL Certificates.

"SSL certificates are not exactly a business with massive profit potential," he said. "Low cost providers like Go Daddy and Comodo have shown that a $50 certificate is just as good as a $900 one from VeriSign."