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Update: NetScreen buys VPN specialist Neoteris

Update: An analyst calls NetScreen's $265 million purchase of SSL VPN maker Neoteris "a great move" for both firms and for their customers, who will benefit from better customer service and an increased focus on product development.

Network security vendor NetScreen Technologies Inc. today announced that it is acquiring Neoteris Inc., a top maker of Secure Sockets Layer virtual private networks.

With this deal, NetScreen will add Neoteris' clientless remote access technology and its secure Web conferencing software to its existing product line of hardware-based security products. Both companies are based in Sunnyvale, Calif.

"Our customers have been asking us about remote access. This acquisition is a way for us to round out our site-to-site remote access offering," said David Flynn, vice president of marketing for NetScreen.

Neoteris' Instant Virtual Extranet and Neoteris Access Series products allow users to securely access corporate data using any device that supports a Web browser. Neoteris also reformats that data for viewing on handheld devices. Its Meeting Series allows users to conduct Web conferences in a secure environment.

"This is a great move for NetScreen," said Zeus Kerravala, a vice president with the Boston-based research firm Yankee Group.

Kerravala said the acquisition will make NetScreen more competitive in the remote access market. It also puts NetScreen ahead of other top security vendors, such as Cisco Systems Inc. and Check Point Software Technologies Ltd. Both have announced plans for SSL VPNs, but have not yet released well-developed products, Kerravala said.

In the long run, the acquisition should be beneficial to Neoteris customers as well, Kerravala said, because they will benefit from NetScreen's larger customer service infrastructure, as well as a likely infusion of development money.

During the next few months, Kerravala said, it will be important for businesses to be in touch with support staff and salespeople as Neoteris merges its operations with NetScreen.

While the remote access products fit strategically with NetScreen's business, it has yet to be seen whether Neoteris' Meeting Series, a Web conferencing product, will remain in NetScreen's new product line for the long run. It is a product that, Kerravala said, enabled Neoteris to extend its technology into new markets as a standalone company. But as part of NetScreen, it may not be as valuable.

Flynn said that Web conferencing has not been a core concern for NetScreen in the past. "We'll have to wait and see; it's a new category for us," he said. "We'll have to let our customers tell us where to take it."

According to the terms of the deal, NetScreen will acquire Neoteris for $245 million in stock and $20 million in cash. NetScreen will gain Neoteris' 550 customers and an estimated 1 million users.

Neoteris' CEO Kittu Kolluri will become executive general manager of NetScreen's secure access product line, Flynn said. Though most Neoteris employees will retain their jobs, Flynn said it is inevitable that there will be some redundancies and therefore some layoffs.


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