July 29, 2003

N2H2 bought by Secure Computing ("SmartFilter") - censorware merger

N2H2, a censorware company famailiar to readers of this blog, is now being acquired by Secure Computing, a security/censorware company (they make "SmartFilter"). See the stories e.g. in BusinessJournal or The Register. I posted this question about the acquistion. to the Secure Computing Yahoo message board:

How to make sense of N2H2 acquisition?

Folks, I don't get this.

Full disclosure - I'm a pioneering (http://sethf.com/pioneer/) critic of censorware (http://sethf.com/anticensorware/), so I'm not disinterested. But I try to understand the industry objectively.

Now, you may not know this, but Secure Computing and N2H2's systems are very incompatible. They can't be buying N2H2 for the "technology".Is it the customer and marketing network? It seems like Secure Computing is paying a huge amount for a company, N2H2, which has NEGATIVE book-value.

Is it because they're paying in stock, so it's not their money?

To respond to another poster, it's clear to me that N2H2 would accept even wildly overvalued stock, because they can sell that stock for something, anything. N2H2 stock is so thinly-traded that the insiders have major problems dumping it (check the insider selling).

So this is a mystery to me. The only way I can make sense of it is that Secure Computing is buying some marketing at a super-inflated prices, but since they're playing in super-inflated stock anyway, it all works out in the end.

By Seth Finkelstein | posted in censorware | on July 29, 2003 11:59 AM (Infothought permalink) | Followups
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