Tag Archive for SaaS

Record Breaking Proofpoint Buyout

Record Breaking Proofpoint buyoutThoma Bravo agreed to a record breaking Proofpoint buyout. The Chicago-based private equity firm plans to buy out publicly traded cybersecurity company Proofpoint (PFPT). The cash deal values Proofpoint at $12.3 billion. Thoma Bravo has agreed to acquire the company with a $176.00 per share price. That is a 34% premium to its trading price starting 04/23/2021.

Proofpoint buyout

Proofpoint Chief Executive Gary Steele told MarketWatch

Proofpoint logo…in 2020 we generated more than $1 billion in annual revenue – making Proofpoint the first SaaS-based cybersecurity and compliance company to reach that milestone

The board of directors of Proofpoint has approved the Proofpoint buyout agreement, including a deadline called the go shop, which expires on June 9th. This means that the company has 45 days to consider proposals from other parties.

About Proofpoint

Former Netscape CTO Eric Hahn, founded Proofpoint in June 2002. He helped launch the company in 2003 having raised $7m in a Series A funding round. Proofpoint was initially backed by venture capitalists Benchmark Capital and by Stanford University. In 2012, the company went public with an IPO which raised more than $80m.

About Thoma Bravo

Thoma Bravo logoChicago’s Thoma Bravo specializes in technology deals. The PE firm has previously made investments in SolarWinds, a software company that is in the midst of a huge cyberespionage campaign. Thoma Bravo has also bought up controlling stakes in cybersecurity companies in the past, including:

  • Barracuda in a 2017 deal worth $1.6 billion;
  • Imperva for $2.1 billion in October 2018; 
  • Sophos in 2020 for $3.9 billion.

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This is a big deal. The $12.3 billion price tag makes it the biggest cybersecurity acquisition of all time. More than the $7.68 billion Intel shelled out for McAfee 11 years ago. And VentureBeat estimates that the Proofpoint acquisition represents one of the biggest overall technology acquisitions ever, putting it in the top 20, alongside megadeals that include Dell’s $67 billion EMC purchase, IBM’s $34 billion Red Hat deal, and Salesforce’s pending $27.7 billion Slack acquisition.

Stay safe out there !

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow him at LinkedInFacebook and Twitter. Email the Bach Seat here.

Dell to Spin off VMWare?

Layoffs are coming to DellUpdated 09/16/2020 – Layoffs are coming to Dell Technologies. Bloomberg reports that during it’s last quarterly all-staff meeting, Dell workers were told that company-wide workforce reductions were coming. A Dell spokesperson announced,  “… we’re addressing our cost structure to make sure we’re as competitive as we should be now and for future opportunities … we’re doing what’s best for the long-term health of our company and our team.

Dell has already taken a number of people cost-cutting measures. It has suspended 401(k) matching, bonuses, and promotions for the fiscal year. The firm had previously announced that 60% of its workforce will WFH or be in the office one or two days a week. Dell will provide a one-time stipend of $400 for home-office equipment.

However, over at VMware, which is 81% owned by Dell, there is a different pain. VMware has told its employees they can move away from Silicon Valley and work remotely on a permanent basis. However, VMware may cut their pay should they chose to move to a less expensive location. Employees who move could face salary cuts of 8% -18% Bloomberg reported.  A VMware spokesperson emailed SDXcentral,

…VMware is building a dynamic, global workforce of the future where our people have choice and flexibility to work from any location … VMware is dedicated to equitable pay for its workforce, not by only race and gender, but also work location or geography.

Dell to Spin off VMWare?

The rumor mill is grinding on Dell and VMware again. Back in June 2020, the WSJ reported that Round Rock, TX-based Dell Technologies (DELL) was exploring the idea of spinning off its $50 Billion – 81% ownership stake in VMware (VMW). But the dust settled on that speculation until recently

VMware logoDuring the 08/27/2020 Q2 earnings call, VMware CEO Pat Gelsinger said his company was in discussions with parent-owner Dell about a possible spin-off. According to a Seeking Alpha transcript, CEO Gelsinger said,

I want to acknowledge the recent Dell Technologies 13D filing about their considerations of a potential VMware spin-off … our Board has formed a special committee … and we are in discussions with Dell.

Potential spin-off

Dell logoCEO Gelsinger sought to assure current VMware customers. “We have over a year to go as any potential spin-off would not occur prior to September 2021.” The potential spin-off would be designed to “unlock the full value of Dell’s hardware business and VMware’s software business.” As of 09/01/2020, VMware’s market cap ($59.2B) overshadows Dell’s ($49.17B) market cap.

In June 2020 statement Dell said:

Dell Technologies believes a spin-off could benefit both Dell Technologies and VMware shareholders, team members, customers and partners by simplifying capital structures and creating additional long-term enterprise value. …  Any potential spin-off would …  be intended to qualify as tax-free for U.S. federal income tax purposes.

VMware Solid second-quarter results

COVID-19Fierce Telecom reports that VMware posted solid second-quarter results in the face of headwinds from the COVID-19 pandemic. On-premise revenues were down to the pandemic. However, VMware’s subscription and software-as-a-service (SaaS) revenue was up 44% from a year ago. SaaS revenue was $631 million and accounted for 22% of its total revenue in Q2.

VMware reported second-quarter earnings of $447 million, or $1.06 per share, on revenue of $2.88 billion. The results were an increase of 9% year over year from $2.63 billion. VMware CEO Gelsinger commented, “I do think, as we’ve indicated, that COVID has been a bit of a headwind for on-premise, growth … particularly in the Americas.”

Looking forward, Mr. Gelsinger foresees uncertainties into 2021 due to COVID-19.

We do think that the environment remains a pretty uncertain. … we expect Q3 to still be challenging with recovery in Q4 and Q1 and into next year … we still think that (there are) several quarters of recovery until we’re back to a more normal economic environment.

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The deal makes sense for the big-wigs. Big-wigs that will profit from the venture include Dell CEO Michael Dell and his venture capital backers. PE firm Silver Lake owns about 100 million shares of Dell, worth over $5 billion. CRN suggests that the deal could shift Dell’s $48 billion in long-term debt elsewhere, potentially to VMware.

What are the risks to VMware’s enterprise customers? CEO Dell claims he expects to formalize agreements between the step-children. The agreements would allow “ongoing strategic benefits and continued support for customers of both companies following any spin-off.” 

The firms have tightly integrated Dell hardware with VMware software. In the face of a COVID-19 recession well into 2021 enterprise customers are going to be pretty risk-averse. Customers are going to have to take whatever price increases VMware imposes to cover the new debt.

There are lots of people available with strong VMware skill-sets. Moving a firm’s infrastructure off VMware to a private or hybrid cloud environment as a managed service would require different IT operating models and skill sets that would probably cost a lot to set up and support. 

Stay safe out there!

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedInFacebook, and Twitter. Email the Bach Seat here.

The Truth About Cyber Security Jobs

The Truth About Cyber Security JobsSites like Monster and CSO.com are predicting a massive wave of new cyber security jobs. Some industry pundits claim there will be up to 3.5 million unfilled cybersecurity positions by 2021. Despite this euphoria. a recent survey by Computer Economics found that security staffing is declining despite security being a top priority for organizations.  The research firm’s annual IT Spending and Staffing Benchmarks study found that after two years of increases, IT security personnel have declined as a percentage of total IT staff.

Cyber Security staff members declined

The Computer Economics report found that IT security staff members declined to 2.9% of the total IT staff in 2018. This is on par with the percentage in 2016, It is down slightly from 2017. Previously, the ratio was stable from 2013-2015 at 2.6%.

IT Security Staffing Ratios

Computer Economics – IT Security Staffing Ratios

A net 75% of organizations that responded to the survey are increasing their spending on security. However, the researchers found that increases in spending do not necessarily lead to headcount growth. Improved technology continues to allow IT staff to be more productive.

Technologies reduce IT security staff count

Major growth areas in IT security include using artificial intelligence (PDF) and machine learning to track anomalies before humans can detect them. Other technologies reducing the IT security staff are Software-defined networking, better awareness around application development to ensure better security from the start. The reduction of in-house infrastructure due to software as a service (SaaS) and the public cloud also contributes to staff numbers holding steady.

However, despite these trends, the need for increased and improved security may eventually lead to increases in security staffing, especially as cloud usage decreases the need for other types of in-house IT support personnel.

In the presser announcing their new report, David Wagner, vice president of research at Computer Economics said, I’d still expect to see slow and steady increases over the next few years, But it is unlikely we will see major jumps. Beyond the efficiency aspects, it is still difficult to find skilled IT security personnel. We’ve seen it before that when a job requires skills that are difficult to find, technology is quickly built to fill in the gaps.

In the face of these challenges, IT executives must ensure that their IT organizations have the proper skills to respond to the latest security threats. For instance, IT security experts are realizing that intrusion-prevention measures must be complemented by the ability to quickly detect an intrusion, stop it from spreading, and remediate it. Privacy must also be top of mind, in the wake of the European Union enacting the General Data Protection Regulation.

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Based on these findings, it seems likely that the cybersecurity boom just went bust. For those who still want to try o change careers into cybersecurity, take a look at the Cybersecurity Supply/Demand Heat Map from CyberSeek. This tool could help you make some good decisions about how to crack the hiring game. According to CyberSeek data, there is an over 500% over-supply of CompTIA Security+ credential holders in metro Detroit. As one would expect, the CISSP credential has the most demand and has a shortage of holders.

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedInFacebook, and Twitter. Email the Bach Seat here.

Avaya Goes Chapter 11

-Updated- 03-07-17 As predicted Avaya spun off its networking business. The lucky winner is Extreme. The presser from Extreme is here.

Avaya Goes Chapter 11In one of the worst-kept secrets in tech, Avaya has finally declared bankruptcy. The Santa Clara, CA-based communications company filed for chapter 11 protection on January 19th, 2017 in the U.S. Bankruptcy Court for the Southern District of New York. Reports are that Avaya faced an end of January deadline to reach agreements with creditors to address its $6.3 billion debt or potentially default.

Avaya logoThe company’s presser announcing the bankruptcy characterizes the decision to seek Chapter 11 as a necessary re-do on deals made a decade ago. The company was spun off from Lucent, a former AT&T unit, in 2000. Avaya went private in 2007 when private equity firms Silver Lake Partners and the Texas Pacific Group took over the firm for $8.2 billion. Avaya was set up as a leveraged buyout – loaded with debt. At the time the new owners said going private would help Avaya to accelerate product development. In 2009 Avaya scooped up the remnants of Nortel for $900m.

The Nortel acquisition added Ethernet switching and VoIP to Avaya’s portfolio. While the move added needed hardware to the Avaya portfolio the rest of the tech world started the shift towards software-as-a-service and the cloud. Avaya was not able to digest Nortel while taking on Cisco, Microsoft, and the cloud at the same time.

$6.3 billion debtAvaya was both late with VoIP and Unified Communications. Neither Microsoft nor Cisco were competitors in the TDM/PBX era. Cisco joined the race with VoIP and Microsoft then came along with Unified Communications. Both have tremendous enterprise penetration and brand recognition.

The pressure forced Avaya to consider selling its crown jewel, its contact center products to Genesys in 2016, in the hope it would raise some cash. When the deal with Genesys fell through, Avaya decided to file for bankruptcy. Avaya CEO Kevin Kennedy said in a statement, “…chapter 11 is the best path forward at this time.

In order to keep the lights on during the reorganization, the company has secured a $725 million loan underwritten by Citibank.

As part of its debt load, Avaya owes its pensioners $1.7 billion in unfunded pension liabilities. According to NoJitter Avaya will honor it obligations to maintain and continue the pension (as did GM in its reorganization).

Chapter 11 only impacts Avaya’s United States operations. In the rest of the world, the company is moving to assure customers and stakeholders that it’s business as usual.

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My experience is that the Avaya IP Office product is way over-priced, even in a bid environment. Why would anyone buy an Avaya Ethernet switch or access point when you can get a Cisco or an HP?

So what is to become of Avaya? One likely outcome is that all of the business units will be sold off to satisfy the creditors. The only thing left of Avaya will be a service organization to care for the huge installed base of orphaned Nortel and Avaya systems.

I know people are already getting calls from Cisco about replacing Avaya.

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedInFacebook, and Twitter. Email the Bach Seat here.

Cyber Attacks on Schools

Cyber Attacks on SchoolsCloud services and data-management systems are multiplying in the edu market. Schools, districts, and states are using online networks to store student data such as records PII, medical records, attendance, and grades. Putting all of this data online is scary enough, these systems are designed to allow parents (and attackers) to get to data from a home PC.

More convenient for teachers and parents

vulnerable to cyber attacksEducation Week explains that the switch to online data is often more convenient for teachers and parents. But these changes can also make state agencies, districts, and schools vulnerable to cyber attacks. The author cites the August 2013 DDoS attack on the Kentucky Department of Education’s statewide Infinite Campus information network as a precursor of things to come. The Kentucky agency was able to fight off the DDoS attack before any data was compromised but school DDoS attacks are occurring more often as they get easier to execute. David Couch the Kentucky Department of Education’s chief information officer said.

What I understand from what I’ve seen is that [DDoS attacks are] a commonality now … I think most organizations have to add to their tool suite a way to detect them.

Online attacks

DDoS attackGCN reports another edu DDoS attack. This one is on OnCourse Systems for Education a SaaS that provides software services to K-12 schools. The firm became the victim of UDP flood from Germany and the Netherlands. The firm tried to fly under the radar, Mark Yelcick, chief technology officer and partner at OnCourse said.

This was the first DDoS attack at OnCourse, and we never thought that we would be a target … There’s no money or assets to be gained by attacking an SaaS provider of K-12 educational systems. We felt that the firewall, intrusion protection and DDoS protection from our data center provider would be enough.

DDoS mitigation platformIn order to turn back the tide of rouge packets, OnCourse brought in Prolexic. Prolexic has solutions tailored for the education market. The company engaged its emergency services, routing traffic through Prolexic’s 1.5 Tbps cloud-based DDoS mitigation platform and stopping the attacks. CTO Yelcick said, “We simply cannot afford downtime brought about by a DDoS attack.”

Because DDoS attacks can target any IP address, it’s impossible to completely prevent them, so for districts and the companies that offer data management services, the focus is on battling these attacks as they come.

battling these attacks as they comeWe have to be prepared and understand the environment that we are operating in so we’re prepared to address these issues as they come up,” says Infinite Campus CEO Eric Creighton, the victim of the Kentucky DDoS attack.

Attackers are after student PII

Part of predicting and combating cyber attacks is understanding why people order these attacks in the first place. When the target is a network that stores student grades and attendance information, the immediate thought is that a student is responsible. However, Mr. Creighton says that students rarely attempt attacks and, in his experience, have never succeeded.

Report card“I don’t think these are attacks attempting to get data … There’s no jackpot of valuable data –there’s no payload here.” CEO Creighton may be spinning the results. rb- I wrote about schools collecting and losing PII here.

One reason that schools and districts are targeted is that their systems are designed for convenient access. Easy access for parents and teachers, makes for easier targets. Marcus Rogers, a professor, and chair of the cyber forensics program at Purdue University told Education Week.

For a lot of these attacks, the intended victim or goal is something bigger than the school. Obviously schools want to protect their data, but the bigger threat is when they use those networks now to go out and attack a power plant or a stock exchange or an air traffic control systems. That’s when the stakes go up.

Caused by a BYOD device

Kentucky education officials believe that the attack on their systems was triggered by a beacon. They hypothesize that a beacon was unknowingly placed on a student’s mobile device, which he or she took with them to school. Viruses can cause a device to send out a beacon, instructing thousands of other devices to attack the network the device is connected to. In Kentucky, officials say that this won’t stop individual districts from implementing bring-your-own-device programs. However, schools can decrease the chances of an attack by making sure that these student devices are properly protected according to Education Week. CIO Couch believes schools will start to protect themselves.

I think what you’re going to see is districts making sure that before people plug into their network they have up-to-date, good virus protection … I think you’ll start to see that in K-12.”

Purdue’s Rogers says that even when schools know best practices for avoiding and combating attacks, such measures are often cost-prohibitive. “A lot of times the schools know what to do, but at the end of the day if they’re trying to get library books, a firewall is not going to be their big concern.”

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedInFacebook, and Twitter. Email the Bach Seat here.