NAI abandons search for PGP buyer; cuts 18 employees

After embarking in October on a drive to trim its product line, Network Associates Inc. (NAI) has decided to no longer seek a buyer for its Pretty Good Privacy (PGP) desktop and wireless encryption products.

The halt in the search for potential buyers was confirmed yesterday by Jennifer Keavney, vice president of corporate communications at Santa Clara, Calif.-based NAI. She said NAI is no longer actively trying to sell the product lines because it was unable to find a buyer who made an appealing enough offer.

"Obviously, we didn't get the offer we thought represented the value [of the products]," she said.

Although NAI discussed selling the products with a number of companies and received several offers, a satisfactory deal couldn't be reached, she said. One issue complicating any sale is that PGP encryption is used in a number of other products from NAI's McAfee division, so the buyer would have had to maintain access to the technology, Keavney said.

The products will be placed into "maintenance mode," she said, meaning that although they won't be developed any further, bug fixes will be released as necessary for one year and service contracts will be honored until the end of their terms.

The idea to sell the PGP products was part of a two-pronged divestiture plan announced by NAI CEO George Samenuk in October (see story), under which the company sold off its Gauntlet product line. That line, which includes firewalls, virtual private network software and appliance products, was sold to Secure Computing Corp. Feb. 13 for an undisclosed sum.

NAI decided to sell the product lines because it couldn't excel in those categories, Keavney said.

"If something is not No. 1 or No. 2 in a market, and there's no clear [path] how to get there, get out [of the market]," she said. The company cited that same philosophy when the strategy was announced in October.

Despite the failure to sell off the PGP products and a reorganization of the product line that cost 18 people their jobs Feb. 26, trimming the products from NAI has been a success, Keavney said.

PGP was created by cryptography pioneer Philip Zimmerman. NAI purchased the software from Zimmerman in 1997. A free version of PGP, which can be downloaded from several Web sites, is still available and used by users around the world.

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