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Dell Sells RSA to Private Equity Firm for $2B
- 142 7y agoLast time information is available, RSA generated about $1 billion in revenue. Very hard to believe that RSA is worth 50% of annual revenue - that's a great ROI. For comparison, Imperva, with revenue of ~$300 million annually in 2018 was bought by Thoma Bravo for $2 billion. I have a hard time believing Imperva is worth the same as RSA.
- redwood 7y agoMust be consulting revenue vs subscription (or similar)
- throw0101a 7y agoHas "private equity firm" in a sentence ever been followed by good news? Why do they seem to mess things up so badly?
- kencausey 7y agoI suspect this is a case of when it all goes well or at least not badly that it is simply normal and a case of 'not newsworthy'. Yes, a lot of bad things happen in the world, but don't forget that a lot of good or just OK happens and never gets reported because it is just normal.
- chungus_khan 7y agoThe issue is that the overwhelming incentive for these sorts of buyouts is towards very short-term decisions leading up to a sale. If things line up correctly, this can have good results, but usually it involves compromising the product, long-term business, cutting corners, etc. People on places like HN are especially wary of this sort of thing because a lot of us are tech professionals who end up in the trenches first hand when those corners get cut. This is especially dangerous in the realm of security.
- tyingq 7y agoThey buy with the expectation that there is a relatively quick turn to "expose value". So lots of cut-throat, short term, etc, decisions post purchase.
- prepend 7y agoI worked for a small nasdaq company about 15 years ago. A private equity firm bought them and two other related companies. They’ve kept them running and private all this time. I presume profitably. I usually assume PE buyouts will result in a teardown situation, but in this case it was positive for customers and employees. I left for unrelated reasons before the sale completed but friends there say they are happy. I’ve also worked for firms that got bought by PE and were stripped down to just a few bodies doing bare minimum maintenance and only collecting maintenance fees from existing customers. I’m not sure what this is called, but it seems “coasting” can be very profitable for enterprise software with an install base that has high switchover costs.
- driverdan 7y agoLet's hope that's the case here, that they strip RSA of all its value and put it out of business.
- dublinben 7y agoCanada Goose was taken over by Bain Capital in 2013 at a $250m valuation. It later went public in 2016 and is currently worth $3.4b. The ubiquity of these overprices parkas is largely due to their "private equity firm" restructuring.
- paulddraper 7y ago> good news Good news for who? The owners? The employees? The customers? The private equity firm? Answers are yes, no, no, yes. > Why do they seem to mess things up so badly? They don't, but they probably aren't optimizing for what you are considering.
- pge 7y ago2.1B is the same price EMC paid to take RSA private in 2006. Zero increase in value in 13 years... https://corporate.delltechnologies.com/en-us/newsroom/announcements/2006/09/09182006-4605.htm https://corporate.delltechnologies.com/en-us/newsroom/announ...
- Traster 7y agoReminds me of Intel doing exactly the same thing, took McAfee from a $7.6Bn valuation in 2010 to a $4.2Bn valuation in 2017.
- NullPrefix 7y agoIt's not zero. 2.1B was in 2006 dollars. 14 years of cumulative inflation would add up to almost 2.7B in 2020 dollars.
- Spooky23 7y agoRSA is a declining platform. They are getting their clock cleaned by many competitors in all segments.
- vijayr02 7y agoI'm not blind to the flaws of private equity, but just wanted to make a point here: there's very little likelihood that the business sold in 2020 is the same that was acquired in 2006. Companies change and the private equity sponsor may have: 1. Spun off businesses that made a profit 2. Paid out dividends that reduced their cost basis Again, I don't know the specifics of the EMC deal and maybe very well they destroyed value, my point is that this is not as simple as comparing numbers at two points in time.
- ausbah 7y ago"Private equity firms increasingly are setting their sights on the security industry due to its rapid and steady growth." I do not trust private equity to main the standards necessary for quality and trustworthy security.
- tyingq 7y agoCybersecurity seems to be growing fast enough that the talent has run out. So lots of under-qualified CISO types running around with money to spend. I think the PE firms are onto something, investment wise.
- TomMarius 7y agoAnd what alternative do you propose? Public equity? Ever heard of NSA, Australian government, UK, etc, and that's just the "democratic", "free" world?
- mech1234 7y agoAre you implying that public equity is some sort of government-owned entity? My best guess is that you are confused as to what the term "private equity firm" means. Your post is so entwined with implications that I have no idea what you really mean.
- TomMarius 7y agoIn my country public means government controlled, which of course includes any assets, yeah. I think as a founder of a startup with VC money and successfully investing with my own money for some time as well, I have a modest grasp on what a private equity firm is.
- kube-system 7y agoIs your startup planning to have an initial public offering? I’d be interested to hear how that works in your country.
- whatsmyusername 7y agoI’m reading this as RSA is deprecated.
- chundicus 7y agoThis is referring to RSA the company, not RSA the public key cryptosystem (both created Rivest, Shamir, and Adleman)
- whatsmyusername 7y agoThat's what I meant, RSA (the company) is cancelled.
- NelsonMinar 7y agoNever forget that RSA is the company that sold out the security of all its customers for a $10M payment from the NSA. https://www.reuters.com/article/us-usa-security-rsa/exclusive-secret-contract-tied-nsa-and-security-industry-pioneer-idUSBRE9BJ1C220131220?irpc=932 https://www.reuters.com/article/us-usa-security-rsa/exclusiv...
- sudoaza 7y ago10M Wow, that's cheap AF!
- blaser-waffle 7y ago"Undisclosed until now was that RSA received $10 million in a deal that set the NSA formula as the preferred, or default, method for number generation in the BSafe software, according to two sources familiar with the contract. Although that sum might seem paltry, it represented more than a third of the revenue that the relevant division at RSA had taken in during the entire previous year, securities filings show." 10MM was also 1/3 of the revenue of that division; that's a big chunk. No reason to think they'd stop that cashflow
- deleted 7y ago[deleted]
- tptacek 7y agoA reminder that RSA was "Security Dynamics" before they bought "RSA" and renamed themselves. Their main line of business was hardware tokens, which were infamously implicated in a compromise by overseas attackers that coined the term "Advanced Persistent Threat". RSA diversified into multi-factor authentication tools for servers and then a bunch of random enterprise security gadgets. Companies like Duo and Okta ate RSA's lunch; their original core business is now a commodity. RSA's relevance in the industry is greatly diminished.
- tialaramex 7y agoAlso the key stupidity that made all this possible is a lesson worth remembering after RSA is forgotten. The RSA tokens are essentially a random number plus form factor. It isn't necessary for the manufacturer to know what the number inside each token is, let alone to store that after the product ships. But of course it's tempting to do so as a convenience for your customers. Once you set off down this slippery slope you're a dead man walking. A FIDO token likewise is a random number plus (somewhat more complicated) form factor. If anybody makes RSA's mistake it has the exact same consequences (big hole in your security for whoever knows the number). Hopefully the decisions in FIDO to eliminate conveniences for knowing the magic number, plus RSA's example has been enough that nobody is dumb enough but we shall see.
- jlgaddis 7y agoApparently Yubico knows the seeds written into their devices, else the OTP auth (against their servers) [0] woulndn't work OOTB, no? [0]: https://demo.yubico.com/otp/verify https://demo.yubico.com/otp/verify
- gumby 7y agoDell has always felt like a financial engineering firm rather than computer firm. Even in the 80s and 90s they made their money through holding the customer’s money, putting unsold product on trucks parked in the street (counts as shipped), having suppliers hold inventory in trucks on their loading docks (supplier has to fund it as Dell hasn’t received it until they take it off the truck) and of course the last couple of decades of back and forth going private - going public
- hammock 7y agoGood article where I can read more about this?
- gumby 7y agoI'm talking about 40 years of reading articles about Dell; perhaps some old magazines from the 80s may not be online too, but: likely if you use a useful search engine* to look up things like "dell negative cost of capital" or "dell minus 11 days receivables", "dell just in time inventory supplier trucks" etc you can probably look up some of their much-lauded "innovations". I believe the "put assembled product into trucks and drive them through the gate" was a one-time act to meet one quarter's goals, but don't remember exactly, though surely it would have been after they went public (the first time). * Google used to be the obvious "useful search engine" when all others were terrible, but these days they emphasize recency and celebrity to the point where their search engine is almost useless in looking up old articles.
- 8bitsrule 7y agoA search using 'millionshort.com' (mentioned here yesterday) and your 1st suggested search string found this 1998 story - 'Inside Dell Computer Corporation: Managing Working Capital': https://www.strategy-business.com/article/9571 https://www.strategy-business.com/article/9571
- protomyth 7y agoI worry with news like this that the PEF has a plan to sue some people after the buy out. I wonder if they have anything that could be used to go after groups?
- 737min 7y agoThe important patents are long-expired.
- notlukesky 7y agoFor whatever it is worth, I work for an SI that sells SAASPASS IAM that also includes MFA solutions and our only churn customers are those using RSA SecurID. I assume this will accelerate, but I suppose that will be obvious in a year or two from now. Of the MFA vendors out there RSA will have to invest to keep up pace with other vendors. Let’s see if the new owners are willing to do that.