Counting the cost of security

Internet security giant Baltimore Technologies has just splashed out 91 million of its shares to buy Content Technologies



Ian mitchell

City briefing

Internet security giant Baltimore Technologies has just splashed out 91 million of its shares to buy Content Technologies, the privately-owned market leader in software that allows IT managers to implement an e-mail security policy.

This is an extremely sensitive and controversial area of IT (just ask Orange which recently sacked staff for contravening its e-mail policy) and one which is growing by over 70% a year.

The deal is complementary in that it increases Baltimore's product portfolio and expands the range of security products offered by the company, and in the medium-term is likely to lead to the development of products that combine several aspects of security.

Longer term, we are likely to see more examples of companies which have a chief security officer.

However, there are also risks to the business that Content Technologies is in from legislation that is due to be implemented in the UK later this year. Content Technologies' products, of which the principal is MIMEsweeper, open and scan e-mails being routed through the company's servers, examining both e-mails and any attachments they may have.

If anything suspicious which may contravene company policy is discovered the system flags the e-mail for further investigation.

Essentially, it allows companies to monitor the flow of information in and out of their business automatically and cost-effectively, protecting the company from staff abusing their e-mail privileges.

But is it legal? When the Human Rights Act is incorporated into UK law later this year it will give employees some protection from employer's monitoring the personal correspondence of their staff, including e-mails.

While the legal advice is that companies which persuade their staff to give them the right to routinely monitor e-mails are likely to be acting lawfully, it won't be until the matter is tested in court that a definitive answer is possible. The bottom line is that legal advice is a necessity for companies monitoring staff e-mails by any means.

Assuming the likelihood that a way to scan e-mails without contravening the law is found, the prospects for the enlarged deal are good.

At just over 40 times revenues for the year to 31 July 2000 the deal must rank as one of the most expensive acquisitions of a private company.

Given Baltimore's acquisitive tendencies and its strong organic growth there are concerns that management cannot afford to take its eyes off the ball, and these concerns, combined with worries over the price, forced Baltimore's share price down following the deal.

But the company is the world leader in IT security and operating in such a strong growth market it cannot fail to remain a key player in the industry.

Ian Mitchell is an IT analyst at stockbroker Beeson Gregory. His opinions should not be construed as investment advice.

Read more on Hackers and cybercrime prevention

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close