stock traded higher today on strong earnings and news
yesterday that the enterprise security firm is buying Sweden's DynaSoft
for about $115 million in stock and cash.
The company's stock closed up 3-5/8 at 44-1/8 today on the news.
Security Dynamics, which bought the well-known encryption firm RSA Data Security in April 1996 for $200
million, is expanding its security offerings under its enterprise security
services (ESS) strategy. Its core product is a line of hardware security
tokens, both PCMCIA cards marketed as SecurIDs and smart cards in 1998.
"We will reach that vision of enterprise security services much faster by
virtue of this acquisition," said David Powers, Security Dynamics senior
vice president. "Whereas our traditional mission was secure remote access
to corporate networks, now our mission is secure information access. It's
quite a good fit, not taking us in any new direction." He estimates
Security Dynamics traditional remote access market is still growing 30 to
40 percent a year.
DynaSoft, which has 85 employees and expects revenues of about $15 million
this year, specializes in access to data within a corporate network,
specifically at the application level.
DynaSoft's flagship product line is called BoKS, which includes single
sign-on capabilities that allow users to log on a network and authenticate
themselves once, then access appropriate information without logging in
again. That eliminates the need to memorize passwords. DynaSoft recently
signed licensing agreements with Sun Microsystems and Hewlett-Packard for
its security software.
Security Dynamics will issue about 2.7 million shares of common stock plus
$6 million in cash for the purchase, which will be accounted for as a
pooling of interests.
In its earnings report yesterday, Security Dynamics beat Wall Street
earnings estimates by a penny per share for the quarter ending June 30. Net
income was $5.5 million or 15 cents per share, compared to $2.9 million or
8 cents per share for the same period last year. Revenues climbed 70
percent to $29.7 million from $17.4 million a year earlier.
The companies said they will provide details on how they will integrate
their technologies in coming months.
DynaSoft's flagship product family, BoKS, aims to protect sensitive
corporate information as companies move from secure internal networks to
less secure intranets, extranets, and remote access over the public Internet.