From: David Lau (MKT-US)
Sent: Saturday, August 28, 2010 7:02:03 AM
Subject: NEWSBANK: Websense CEO says open to takeover bid
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Websense CEO says open to takeover bid
By Paritosh Bansal
NEW YORK (Reuters) - Security software firm Websense Inc (WBSN.O) is open to takeover bids after rival McAfee Inc (MFE.N) was snapped up by Intel Corp (INTC.O), but it does not plan to put itself on sale in an auction, its chief executive said on Friday.
Shareholders of Websense, which specializes in Web, data, and e-mail content security, were happy to see the Intel-McAfee deal as it signaled further consolidation in the sector, Chief Executive Gene Hodges told Reuters in a phone interview.
Websense, with a market capitalization of about $820 million, is among a slew of other security software companies that are seen as potential targets, as a wave of consolidation sweeps through the technology sector.
Last week Intel agreed to buy McAfee for $7.7 billion, paying a 60 percent premium over McAfee's closing price the day before the bid. This week Hewlett-Packard Co (HPQ.N) and Dell Inc (DELL.O) are locked in a fierce $2 billion bidding war for data storage company 3PAR Inc (PAR.N), which is pushing up valuations.
Hodges, a former McAfee president, declined to say whether Websense had been approached by anyone, but added, "That's the type of thing that happens in this industry."
"In my experience the way that you position yourself for sale is not to go around saying, 'I am for sale,'" Hodges said. "It's to win in the marketplace and make sure that potential suitors know what your unique assets are."
"It's certainly, in my opinion, bad negotiating strategy to say at any point I want to sell, although at every point one must be ready to sell at a good price," Hodges said.
This might be a good time for that. Technology giants like Oracle Corp (ORCL.O), Hewlett-Packard, IBM Corp (IBM.N) and EMC Corp (EMC.N) are all looking to expand the "stack" of hardware and software they offer corporate clients.
Premiums, like the bump McAfee shareholders got from Intel, are becoming common as these companies, flushed with cash, go on their shopping spree.
Hodges said he expected the consolidation to be led by the mega-cap companies in the sector, with it being "quieter in the fraternity."
Websense shareholders "feel good about our ability to execute and drive the stock price up on an organic basis so they have got two ways to win," Hodges said.
Still, the company has seen its stock price swing wildly amid the global financial crisis.
Last month Websense beat quarterly profit expectations, but missed revenue estimates and lowered the range of its 2010 revenue outlook, sending its shares down.
But Websense stock got a boost along with others in the sector, like Symantec Corp (SYMC.O), after the Intel-McAfee deal. Its shares are up 8.6 percent since August 18, the day before that deal was announced.
"That's basically just reaffirmation to existing and potential investors that you have a chance for making money not only through organic execution, but somebody might walk in and buy these guys," Hodges said.
(Reporting by Paritosh Bansal; editing by Gunna Dickson)