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Comment by dododo | Hacker News Reader

McAfee do more than just desktop antivirus: for example, they have mobile, virtualisation and network security products. see products by category here: http://www.mcafee.com/uk/enterprise/index.html

Intel has a large interest in mobile, virtualisation and network arenas; this isn't really as surprising as you make out.

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McAfee also has strong UI programming expertise that Intel sorely needed. Intel's IPP and MKL libraries are absolutely great, but VTune looks like it is fresh out of 2002. They get access to several stable revenue streams (like antivirus), and can cherry-pick talent to work on whatever projects they want. There aren't many downsides for Intel.

We're talking about $7.7 billion. I'm not sure it's quite as rosy a picture as you paint. I'm not that familiar with McAfee's annual profits, but even if they make $500 million a year, we can value the talent they cherry-pick at an absurdly high value of $1 billion, and it would still take Intel well over 10 years to recoup the investment, assuming stable revenue streams.

$173 million in 2009, up from $172 in 2008 and $166 in 2007. It seems odd to make an assumption when the real answer is seconds away!

Thanks, I was about to head into a meeting and didn't have time to do the research. Assuming $175 million in profits per year, that means 44 years to breakeven, ignoring the talent acquisition angle. How much are 20 (or even 50) good programmers worth?

http://online.wsj.com/article/SB1000142405274870447610457543...

Intel's stock only took a small dip, and it looks like some of those who left were shifting it to McAfee to ride the wave as the stock went up.

That's a lot of investors in an otherwise volatile market not jumping ship, so they must see something good in the deal that we're missing.

Either that, or stock market prices are much less connected to business fundamentals than one would hope.

Small dip??? Intel lost $3.5 billion in market cap on the news. McAfee gained $2.6 billion.

$3.5b is a big number, but it's only 3% of their market cap.

http://www.google.com/finance?client=ob&q=NASDAQ:INTC

Several other companies in that market went down a similar amount, so it doesn't seem to be extraordinary. I would expect a lot of tech investors to move their money to McAffe after that announcement hoping to get something out of it.

What matters is what happens after now. If it continues to go down for a long time, it might be a problem.

They would be ecstatic with that kind of return. Without growth and still making a hefty return. McAfee has ~$2b in revenue but an operating income of "just" $221m.

A simplified perpetuity of $175m @ 6% would have a PV of ~= 3b. I'm having trouble seeing how they'd ever break even based on profits alone. I just can't imagine what kind of integration with existing products they think will add another 4.7b.

6% seems a little high given the current climate, no? Take that down to 3% and you're in the neighborhood of the deal price.

Still not sure if I agree with the deal, and it does seem driven by a bunch of cash burning a hole in Intel's pocket.

$7.7Bn is a lot of UI programming expertise... As in, how many salary/years is that at market rates?

7.7 Billion dollars for UI design?

It seems strange that Intel is investing in this particular sector that leverages mostly Windows stuff. They should move out of Steve Ballmer's basement and make their own OS.

Why do they want to make software for platforms when their competencies are on hardware?

One that doesn't look like a antivirus program for Windows.

I don't really get how you can write:

"They should move out of Steve Ballmer's basement and make their own OS." and "Why do they want to make software for platforms when their competencies are on hardware?" at the same time.

They're leapfrogging to a niche market of going from hardware to security on the Windows platform. What's the gain in getting into an specific platform's flaws (antivirus) and development environment? That's the corner of the platform itself, not to mention the scope of the OS industry.

If they want to do software, they should develop a OS, maybe for Atom or some kind of mobile platform or otherwise.

Antivirus is back and to the left.

> If they want to do software, they should develop a OS,

> maybe for Atom or some kind of mobile platform or otherwise.

I believe that's MeeGo (http://meego.com/).

My bullet points are just pointing out some icing on the cake that comes with the deal.

"Why do they want to make software for platforms when their competencies are on hardware?"

Vendor lock-in and community are just as helpful for Intel as they are for other businesses. If they can grease the wheels for their primary business (even at a small loss), then it's not necessarily a bad idea.

They should move out of Steve Ballmer's basement and make their own OS.

Yeah, that won't have antitrust implications, or anything.

Would it? I don't think so. Which part of the antitrust laws would that violate?

http://en.wikipedia.org/wiki/United_States_antitrust_law

Are you kidding me? McAfee creates great UIs? Since when?

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