May 20, 2010, 4:13 PM

Symantec buys VeriSign’s security unit for $1.28 billion

Symantec Corp., the maker of Norton computer security products, says it will buy the identity and authentication business of VeriSign for $1.28 billion in cash. VeriSign markets services to secure communications between web sites and Internet users.

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Symantec Corp., the maker of Norton computer security products, will buy the identity and authentication business of VeriSign for $1.28 billion in cash. VeriSign markets services to secure communications between web sites and Internet users. Symantec says the combination of VeriSign`s security products and services and Symantec`s security services and widespread distribution will enable Symantec to deliver on its goal to help consumers access their information safely and securely from anywhere.


Under the terms of the deal, Symantec will purchase the Secure Sockets Layer (SSL) Certificate Services, the Public Key Infrastructure (PKI) Services, the Trust Services and the VeriSign Identity Protection (VIP) Authentication Service of VeriSign. It also will buy  the majority stake in VeriSign Japan. The agreement is subject to regulatory approvals, and is expected to close in the fall.


145 online retailers in the <i> Internet Retailer </i> Top 500 Guide use VeriSign’s authentication and security services, which include SSL certificates and services to verify the authenticity of a web site and encrypt communications between sites’ web servers and consumers’ web browsers.,

Avivah Litan, a security technology analyst at research and advisory firm Gartner Inc. says the purchase won’t impact those online retailers any time in the near future. SSL certificates are largely a commodity at this point, and the prices are dropping because of pressure from lower-priced competitors like GoDaddy and Comodo, she says.  “There’s really not that much to an SSL certificate, and most of the time the lowest-priced certificate wins,” she says.




What’s more, the acquisition may signal good news for VeriSign competitors. Symantec probably won’t pour as many marketing dollars into the business as VeriSign has, Litan says. “They are more likely to be distracted since it won’t be a core business,” she says. And when a company markets a higher-priced product than the competition, marketing is essential.



In a blog post, Gartner comments negatively on the deal. Symantec is entering into the largely commoditized, small deal-sized SSL server certificate market that has only marginal synergy with Symantec’s major revenue sources, and VeriSign’s market share and average unit revenue have been dropping steadily as a result of lower-priced competitors, Gartner states. While the acquisition gives Symantec another revenue stream, it won’t enhance its overall portfolio or the effectiveness of other Symantec security products, Gartner says.

VeriSign completes more than two billion security checks daily and its certification check mark is displayed on the web 175 million times every day on more than 90,000 web sites in 160 countries, the company says. Symantec`s Norton-branded and other security services are used by one billion systems and users around the world, Symantec says.

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