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Network General back in business

Can the company that fell on hard times as a part of Network Associates go it alone again?

Network General re-emerged on Friday after a seven-year pairing with McAfee, promising that a sole focus on network administration will serve its customers better.

The company was sold by McAfee, formerly Network Associates, to Silver Lake Partners and the Texas Pacific Group for $235 million in a transaction that was completed Friday. Emerging from the shadow of a security-focused company will help the firm focus more keenly on its core users, said Nancy Blair, vice president of marketing and product management for Network General.

"In the confines of McAfee, our customers--the network managers--felt a little underserved," she said, adding that the company intends to invest more heavily in network products.

The reformation of Network General is the last stage in the dismantling of Network Associates, created by the merger of Network General and McAfee in 1997. The firm-formerly-known-as-Network Associates, announced the divorce last year, and the chunk once known as McAfee reassumed that name at the end of June.

As the Sniffer division of Network Associates, Network General had trouble focusing on network administration because that market fell apart during the Internet economy downturn, while security remained a strong industry. Those dynamics caused the Network General team to essentially play second fiddle to security, Blair said.

"I think that the original acquisition plan for Network Associates was brilliant on paper but hard to execute," she said. "McAfee is determined to focus on the security space, and the end customer is very different (than ours). It is like selling to Jekyll and Hyde."

That difference created a tough situation in which one sales force had to try to sell to two different client bases. Network administrators will likely be happier dealing with a company that focuses just on their issues, said Debra Curtis, vice president of research for analyst firm Gartner.

"From the network manager perspective, they felt that the Sniffer products were losing traction and focus as (those products) lost out to some security considerations," she said. "There is a lot more to network management than just security."

Considering that the Sniffer division accounted for about $210 million of revenue for Network Associates in 2003, Network General's investors appear to be getting a bargain, she added. The only caveat: The sales of the division had slid and will likely be much lower this year.

Network General's Blair stressed that the company, on its own, will have a better chance of turning those revenue declines around. The company has about 6,000 worldwide customers, and its investors have deep pockets, she said.

"We are not back to 1997--we are charging forward in 2004," she said.