Intel surprises Wall Street with $7.7bn purchase of McAfee

Intel, the world's largest maker of microchips, is paying $7.7bn for the software company McAfee, in a deal analysts described as "weird", "out of left field" and "not the combination investors were expecting to wake up to".

But if the immediate reaction to the acquisition was one of surprise, Intel insisted that it would usher in a new era where security against hackers and computer viruses was built into the very hardware at the heart of the tech industry.

McAfee, famous for software that scans for viruses and installs firewalls on personal computers, agreed to sell to Intel at a 60 per cent premium to the prevailing share price.

The pair have been collaborating for 18 months on new products that will embed McAfee security software within Intel's new technology for smartphones and other internet-enabled devices, from televisions to ATMs.

"In the 1990s, when we added capabilities to our platform so users could connect to the internet, PC demand exploded," Paul Otellini, Intel chief executive, explained on a conference call with analysts. "But the increased use of the internet is leading to an increased level of security threats. The number of security threats is increasing and security will be most effective when embedded in hardware."

Security will be a "third pillar" alongside energy efficiency and connectivity when electronics manufacturers are choosing between chip technology platforms, he said.

"It's slightly out of left field, nobody would have seen this coming," said Chris Hickey, an analyst at Atlantic Equities, but he said Intel could gain from selling software to its PC customers. Intel chips are used in the majority of personal computers but it has fallen behind in smartphone technology and in other electronic devices. "The deal follows several Intel acquisitions in the connected device spaces," said Richard Williams of Cross Research. "The emergence of malware on wireless devices makes the McAfee deal fit well with Intel's strategy."

McAfee was founded in 1987 and had revenue of $2bn last year.

The company warned last week that it had registered record numbers of new malware threats in the first half of 2010, as hackers seek to obtain the personal details of internet users or simply to disrupt PC activity. McAfee's quarterly report said it was finding 55,000 new threats every day.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent