WSJ Article, by Lisa Bransten (WSJ Interactive Edition) "McAfee Announces Name Change, Acquisition of Pretty Good Privacy" McAfee Associates Inc., a Santa Clara, Calif., maker of network-security software, said Monday that it agreed to acquire Pretty Good Privacy Inc., a privately held maker of encryption software, in a deal valued at $36 million. Separately, McAfee completed its acquisition of Network General and said it was officially changing its name to Network Associates Inc. [snip...] One investment banker estimated PGP's revenue at almost $8 million this year and at as much as $18 million next year. [Network Associates Chairman and CE0 Bill] Larson said Network Associates made an all-cash offer for PGP because of the low price of shares of McAfee (now Network Associates). Mr. Larson called the acquisition "a reflection of how significant an opportunity we see in the security market." Mr. Larson called PGP a "neophyte" but also "a strategic player" in security software, adding that Network Associates "will be a player in this market." [snip...] PGP, based in San Mateo, Calif., was once a leading contender for an initial public offering but ran into troubles in the middle of the year as sales stagnated and a planned acquisition of software company Zoomit Corp. fell apart. Zoomit makes software that allows for easy communication across different networks. PGP founder and chief technologist Philip Zimmermann has developed something of a cult following among software programmers and cyber-rights activists since the early 1990s, when he started giving away his Pretty Good Privacy program, which allows computer users to encrypt electronic messages sent over the Internet. Mr. Zimmermann distributed the software for free in order to get it into the most users' hands amid growing concerns that governments would try to limit the use of encryption technology, fearful that such technology would stymie law-enforcement agencies' efforts. Appetite for the software proved large and millions of copies of the software were downloaded by users around the world. Mr. Zimmermann's case became a cause celebre among activists when the Justice Department opened an investigation of him for allowing the software to be distributed internationally. Although the government allows the use of such encryption technologies in the U.S., it doesn't allow the export of strong-encryption software except in special circumstances. In 1996, the government dropped its investigation of Mr. Zimmermann, and in March of that year he and several partners incorporated PGP to sell commercial versions of the software to large corporations interested in security. Mr. Zimmermann will stay with the company as a Network Associates Fellow. [snip...] "We get a great group of leading cryptographers," [Larsen] said. "There are very few of these people in the world, and PGP has always been a magnet for [them.]" PGP, which has about 50 employees, has fought to have its encryption software adopted as a standard, but software giants Microsoft Corp. and Netscape Communications Corp. have both licensed the encryption software of PGP rival RSA Data Security Inc., which was itself purchased last year by Security Dynamics Technologies Inc. Before Monday's announcement, several observers had said that PGP and McAfee would be a logical combination because companies are looking for software that can address more than one of their security and networking needs. Also, PGP's encryption technology and large installed user base could bolster McAfee's recent entry into that field, they said. PGP has "good brand recognition and good technology, but no marketing muscle," said one industry watcher. "If PGP's encryption standard is going to compete, they need a distribution partner like McAfee behind them." Shares of Network Associates will begin trading under the new Nasdaq symbol NETA on Tuesday. /end - WSJ Interactive, Bransten text/ Vin McLellan + The Privacy Guild + <vin@shore.net> 53 Nichols St., Chelsea, MA 02150 USA <617> 884-5548 -- <@><@> --