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Network Associates abandons search for PGP buyer, axes 18

By Sam Costello
IDG News Service, 03/06/02

Network Associates Inc. (NAI) is no longer trying to find a buyer for its PGP desktop and wireless encryption products, after embarking on a drive to trim its product line in October.

The halt in the search for potential buyers was confirmed Wednesday by Jennifer Kevney, vice president of corporate communications at NAI. NAI is no longer actively trying to sell the product lines, she said, because it was unable to find a buyer who made an appealing enough offer.

"Obviously, we didn't get the offer we thought represented the value (of the products)," she said.

Although NAI did discuss selling the products with a number of companies and received several offers, a satisfactory deal could not be reached, she said. One issue complicating any sale is that PGP encryption is used in a number of other products from NAI's McAfee division, so the buyer would have had to maintain access to the technology, she added.

The products will be placed into "maintenance mode," she said, meaning that though they will not be developed any further, bug fixes will be released as necessary for one year, and service contracts will be honored until the end of their terms.

The sale of the PGP products was part of a two-pronged divestiture plan, announced by NAI CEO George Samenuk in October, in which the company would also sell off its Gauntlet product line. That line, which includes firewalls, VPN software and appliance products, was sold to Secure Computing Corp. for an undisclosed sum on Feb. 13.

NAI decided to sell off the product lines because it could not excel in those categories, Kevney said.

"If something is not number one or number two in a market, and there's no clear (path) how to get there, get out (of the market)," she said. The company cited this same philosophy when the strategy was announced in October.

Despite the failure to sell off the PGP products and an attendant reorganization of the product line that cost 18 people their jobs on Feb. 26, the trimming of products from NAI has been a success, Kevney said.

PGP, which stands for Pretty Good Privacy, was created by cryptography pioneer Phil Zimmerman. NAI purchased the software from Zimmerman in 1997. A free version of PGP, which can be downloaded from a number of Web sites, is still available and employed by users around the world.

The IDG News Service is a Network World affiliate.

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