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Network Associates (NAI) is selling off its Sniffer networking tools division to private investors, and will now concentrate solely on the security market. NAI will rechristen itself as McAfee on completion of the sale, due to close in Q3.

Silver Lake Partners and Texas Pacific Group are to buy NAI's Sniffer product line for around $275m in cash. The investors will form a new entity named Network General, led by the Sniffer Technologies management team. Network General will continue to develop and support the technology, customers, and partners of Sniffer Technologies, according to NAI. Between 450 to 500 NAI workers will move to Network General.

"We will work with Network General to ensure our customers go through this change with as little impact as possible," said George Samenuk, chairman and CEO of NAI. "Network General and McAfee will continue to partner for years to come in support of these customers."

McAfee reborn

Network Associates will now focus al efforts on IT security, which accounts for approximately three quarters of its annual sales. The sale of Sniffer will be accompanied by a cost-cutting and restructuring plan designed to deliver 25 per cent operating margin by the middle of next year.

The restructuring is the latest in a series over the last three years which has seen the company shed its PGP encryption, Gauntlet firewall business and now its Sniffer network monitoring division in a bid to return to financial health. An SEC probe into finances forced NAI to restate its earnings. It's been a rocky ride.

What a contrast from the mid-to-late 1990s when McAfee expanded to become Network Associates through a series of deals that made it the most acquisitive company in the security maket.

NAI says that despite all the changes its underlying security business remains strong. It expects first quarter net revenue to come in at $217m. McAfee reborn (enterprise AV and intrusion prevention products, the McAfee Labs research organization, and a consumer security business) grew 11 per cent year over year in revenue, while bookings grew 32 per cent year over year. The McAfee online consumer business signed up 860,000 new subscribers in Q1.

Samenuk said: "This company is engaged in the most aggressive and important transformation in its history. (These) announcements demonstrate our commitment to increase shareholder value by streamlining our business and accelerating profit and growth." ®

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