Cisco pays over $1m per employee in takeover

Cisco Systems on Tuesday said it was paying about $13 million in cash to acquire an Internet security company that employs a mere 11 engineers and was founded just eight months ago.

Cisco, the world's largest maker of Internet equipment, said it had completed the acquisition of privately held M.I. Secure Corp., which focused on the development of security technology, including so-called virtual private networks.

M.I. Secure is a research organization with no staff other than its 11-member engineering team, a Cisco spokeswoman said. M.I. Secure has no products or revenue, she said.

Both companies are based in San Jose, California.

Virtual private networks (VPNs) are a popular method used by companies to give their employees secure access to corporate networks. VPNs are private networks built using data encryption technology that can run securely over the public Internet.

"This purchase brings unique security technology expertise and a team of proven security architects to Cisco," the acquiring company said in a statement.

M.I. Secure was founded in October, 2004, Cisco spokeswoman Elizabeth McNichols said. In March, Cisco paid $800,000 to take a minority investment stake in the company, she said.

The initials in the name M.I. Secure come from the first name of Michael Herne, the company's chief executive, and Igor Plotnikov, its vice president of engineering. The two partners worked together at a previous security start-up -- uRoam, which subsequently became part of F5 Networks.

The 11 employees are engineers with an average of about 15 years of experience working in computer security start-ups around Silicon Valley.

The acquired company will become part of Cisco's Security Technology Group (STG), Cisco said.

Cisco is the market leader in the VPN market. According to Infonetics Research Inc. of Campbell, California, Cisco generated 38 percent of the market for VPNs and related Internet firewalls during the first quarter of 2005.

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