Intel Spins out Security Group

By Rick Merritt, EETimes,SAN JOSE, Calif., Sept. 07, 2016 – 

Intel Corp. will sell 51% of its security group to a private equity company for $3.1 billion in cash, spinning it off as an independent company to be called McAfee. Under former chief executive Paul Otellini, the x86 giant bought McAfee in 2010 for $7.68 billion.

Intel will retain 49% ownership of the new company in a transaction valuing the business at $4.2 billion. In a written statement, Intel called the new company "one of the world's largest cybersecurity companies."

An estimated 7,500 McAfee employees will leave Intel at the close of transaction, expected in the second quarter of 2017. The move follows a broader reorg announced in April in which Intel said it is laying off 12,000 workers.

In a research note, Deutsche Bank analyst Ross Seymore forecast the group would earn $2.2 billion this year with an operating margin of 17%. Overall, represents about 4% of Intel's revenues and 2% of its operating profits, he said.