NetScreen buys Neoteris for SSL abilities

FRAMINGHAM (10/06/2003) - NetScreen Technologies Inc. has found a way to offer customers both IPSec remote access and browser-based remote access: by buying Secure Sockets Layer (SSL) remote access vendor Neoteris.

The deal announced Monday for US$245 million in stock plus $20 million in cash gives NetScreen technology that can complement its well-established IPSec capabilities for making secure connections over the Internet.

NetScreen, which is habitually ranked among the top IPSec virtual private network vendors, and Neoteris, which many analysts credit with being at the top of the admittedly young SSL market, expect to complete the deal by the end of the year.

Other major IPSec vendors that have already attempted to add SSL to their technology include Check Point Software Technologies Ltd., Nokia Corp. and Nortel Networks Ltd., with Cisco Systems Inc.'s Web site promising that the company will make its SSL plans known this fall.

NetScreen plans to sell Neoteris' IVR appliances as is, with no plans to integrate hardware with NetScreen IPSec equipment. It says customers prefer separate devices. Short-term, the Neoteris name will remain linked to the SSL products, but that could change.

NetScreen plans to integrate management of the two lines of equipment, giving users a single view of user security policies, but the company has no timetable for that integration.

Both IPSec and SSL support single computers connecting to corporate networks over the Internet, the major difference being that IPSec always requires separate client software on the remote machine. SSL, because it operates at the application layer, can offer finer control over what applications, files and other resources remote users are allowed to access.

SSL can support many applications that are Web-based using just the SSL capabilities found in standard Web browsers. By downloading a software agent, the browsers can be given support for network-layer access via SSL, making the user experience seem as if the computer is attached directly to the corporate network.

NetScreen has been looking around for an SSL company to team up with for a while. Last year, the company announced a joint sales agreement with SafeWeb under which the companies were to push each other's products when customers seemed interested. For months now, one of the most prevalent rumors in the industry is that NetScreen was about to buy an SSL remote access vendor, with the name of the vendor changing frequently.

The companies acknowledge significant customer overlap, but NetScreen says that 55 percent of its business is overseas, while Neoteris is just starting to sell there. NetScreen has 630 employees and Neoteris has about 160. The new company will have about 750, NetScreen says.

NetScreen says that in 2004, its revenues for SSL gear should be US$47 million to $552 million. NetScreen's revenues for the fiscal year that ended Oct. 1 are expected to be about $240 million.

Neoteris President and Chief Executive Officer Kittu Kolluri will become the general manager of NetScreen's SSL group.

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