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Intel reportedly considering selling its security business

New reports suggest Intel may be looking into selling off its security business, and experts are unclear whether it means Intel's McAfee acquisition has gone sour.

A new report suggests Intel has begun talking to bankers about the future of its security business and may be considering putting Intel Security up for sale.

The Intel Security business is dominated by McAfee, the security software company Intel purchased in 2011 for $7.7 billion.

Speculation about the Intel Security business sale comes after Intel announced a restructuring plan in April 2016 "to accelerate its evolution from a PC company to one that powers the cloud and billions of smart, connected computing devices." Intel said the focus of the restructure would be on data centers and its internet of things businesses.

Intel's first-quarter results showed its security business had strong numbers, with revenue of $537 million -- an increase of 5% sequentially and 12% year over year.

Experts speculated, with Intel's restructuring plan and the recent high-profile acquisitions in the security industry, Intel might be looking to capitalize on its security business now, because the value may not get any higher.

"If it's true that Intel is looking to sell its security business, most likely, it's because they couldn't figure out how to grow that business. At the end of the day, they couldn't create the synergies they thought existed in the McAfee acquisition, and Intel struggled to grow its security business," said Paula Musich, research director for NSS Labs Inc., based in Austin, Texas. "Chris Young was brought in from Cisco Systems to try to shake things up, and he cut stagnant or slow-growing product lines, sold off the NGFW [next-generation firewall] business and emphasized the more competitive product families in its portfolio. At the same time, there is a lot of money pouring into the cybersecurity market from private equity investors, and valuations are quite attractive."

Intel Security also surprised users late last year when it announced several of its software-as-a-service (SaaS) security products officially entered end of life and the company would stop selling its McAfee SaaS Endpoint Protection and McAfee Email Security Solutions product lines.

When Intel purchased McAfee to create its Intel Security business, Intel announced the aim was to embed security into its hardware. But SearchSecurity learned from an expert with direct knowledge that Intel's dream of McAfee informing security design never came true. The expert said McAfee was never successfully integrated into Intel because of a culture clash.

Reactions on Twitter were mixed, but the inimitable SwiftOnSecurity appeared to agree with this assessment:

The report on Intel considering the sale of its security business also claimed a group of private equity firms may join together to buy the security business, if it is sold at the same price or higher than Intel paid.

"I think the usual suspects on the private equity side include Thoma Bravo, Silver Lake Partners, Bain Capital, and now that Elliott Management is buying businesses instead of large blocks of shares, they may make a stronger play into the security market," Musich said. "I think this is the most promising scenario -- private equity investors banding together to acquire the company."

An Intel spokesperson said the company is declining to comment on the speculation.

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