Aladdin Knowledge Systems Ltd. (NASDAQ: ALDN), an information
security leader specializing in authentication, software DRM and
content security, today announced that it has completed the
acquisition previously announced on July 30, 2008, of the Secure
SafeWord product line from Secure Computing Corporation (NASDAQ:
SCUR) for approximately $65 million in cash, including acquisition
costs.
The Company today also raised guidance for the fiscal year 2008
to give effect to the completion of the SafeWord acquisition, as
well as preliminary estimates of the performance of the Company's
core business.
"We are pleased to have completed this exciting transaction, and
we expect to realize immediate benefits from the acquisition of
SafeWord," said Yanki Margalit, Chairman and CEO of Aladdin
Knowledge Systems. "SafeWord adds highly reliable technology to
Aladdin as well as a strong market and channel presence, enabling
us to offer customers a broader range of solutions for their
security needs. Additionally, we will be able to leverage
SafeWord's global presence and competitive strengths to position
the Company for long-term success. We welcome SafeWord's
world-class employees, who join the rest of our hard working and
innovative team in continuing to develop industry-leading
technologies to support our global customers and enhance value for
all of our stakeholders."
"Today's announcement is another important step in executing our
business plan, which includes organic growth complemented by
additional opportunities that further strengthen our portfolio of
IT security offerings, contribute to our market share and sales,
and increase Aladdin's global brand recognition," continued Mr.
Margalit. "The Aladdin Board and management team are confident that
continued execution of our strategy will enhance value for our
shareholders."
Shlomi Yanai, Vice President of the Authentication unit, added:
"SafeWord adds industry-leading one-time-password authentication
products to Aladdin's suite of enterprise identity and access
management solutions and contributes tremendous security knowledge
and expertise to Aladdin's team of authentication experts.
Combining eToken's and SafeWord's personnel, technology and
partnerships positions Aladdin as a leading strong authentication
provider. SafeWord brings a new level of one-time-password
authentication to Aladdin's eToken brand, adding value for
Aladdin's customers by advancing the technology. Aladdin also
expands the options available to SafeWord customers, who now have
access to the entire line of eToken devices. We are committed to
continuing to serve SafeWord customers while providing seamless
integration into the Aladdin family."
"As a long-time reseller of SafeWord, we are thrilled at the
opportunity to expand our business with a company like Aladdin,"
said Gordon Shevlin, Executive Vice President at Fishnet Security.
"We see Aladdin's focus on authentication solutions and proven
track record of launching new products as a very positive
development for the SafeWord product line."
Aladdin and SafeWord will maintain service to SafeWord's
customers by providing continued manufacturing services, as well as
sales, service and support.
Raised Annual 2008 Guidance
Based on preliminary estimates, primarily due to the effect of
the completed acquisition of SafeWord, as well as the current
performance of the Company's core business, Aladdin now expects its
2008 non-GAAP revenues to be between $124 million and $132 million,
compared to the previously reported GAAP range of $112 million to
$120 million provided at the end of the second quarter and as
compared to the $105.9 million in revenues reported for fiscal year
2007. Non-GAAP revenues include any deferred revenue valuation
adjustment (currently estimated to be approximately $4.3 million)
relating to the SafeWord acquisition. Aladdin expects GAAP revenues
to be between $120 million and $128 million in fiscal year
2008.
Fiscal year 2008 non-GAAP diluted earnings per share are
expected to increase to between $0.67 and $0.77 from between $0.48
and $0.56. Non-GAAP earnings per share guidance excludes the
projected impact of stock-based compensation expenses of
approximately $2.0 million, valuation adjustment on acquired
deferred revenue of approximately $4.3 million and amortization of
intangibles and anticipated one-time expenses related to the
Company's recent acquisitions of approximately $3.9 million. The
acquisition-related adjustments are based on preliminary estimates
and are subject to change pending final analysis.
The Company reported non-GAAP earnings per diluted share of
$1.20 for fiscal year 2007, which excluded stock-based compensation
expense and the impact of the $2.0 million non-recurring up-front
cost associated with production of video-based training.
Fiscal year 2008 GAAP diluted earnings per share is expected to
decrease to between $0.00 and $0.05 from a range of $0.36 to $0.44,
primarily due to the impact of accounting charges related to
acquisitions. The Company reported GAAP diluted earnings per share
of $1.02 for fiscal year 2007.
"We are encouraged by our prospects for the remainder of 2008,
due in large part to our SafeWord acquisition, which we expect to
have an immediate positive impact on our earnings on a non-GAAP
basis during this quarter," Mr. Margalit added. "Our revised 2008
annual guidance validates the framework we previously provided on
July 30th, the day we announced the SafeWord transaction, and
affirms our expectations that SafeWord will provide Aladdin with
profitable revenues and growth opportunities. With our investment
plan beginning to bear fruit, together with the ongoing performance
of our core business, our pipeline and current market trends, we
have great confidence in our 2008 business outlook."
Use of Non-GAAP Measures
The purpose of adjustments from U.S. Generally Accepted
Accounting Principles (GAAP) to non-GAAP is to give an indication
of the Company's performance exclusive of non-cash charges and
other items that are considered by management to be outside of our
core operating results. Aladdin's non-GAAP financial measures are
not meant to be considered in isolation or as a substitute for
comparable GAAP measures, and should be read only in conjunction
with the Company's consolidated financial statements prepared in
accordance with GAAP. Aladdin management regularly uses its
supplemental non-GAAP financial measures internally to understand,
manage and evaluate our business and make operating decisions.
These non-GAAP measures are among the primary factors management
uses in planning for and forecasting future periods. Among the
acquisition-related charges is a deferred revenues valuation
adjustment. Business combination accounting rules requires the
Company to recognize a legal performance obligation related to a
revenue arrangement of an acquired entity. The amount assigned to
that liability should be based on its fair value at the date of
acquisition. Aladdin believes this adjustment is useful to
investors as a measure of the ongoing performance of its business.
The Company believes these non-GAAP financial measures provide
consistent and comparable measures to help investors understand its
current and future operating cash flow performance. These non-GAAP
financial measures may differ materially from the non-GAAP
financial measures used by other companies.
The Company undertakes no obligation to update its
estimates.
The Company will report third quarter earnings in October,
2008.
About Aladdin
Aladdin Knowledge Systems (NASDAQ: ALDN) is an information
security leader with offices in 12 countries, a worldwide network
of channel partners, and numerous awards for innovation. Aladdin
eToken is the world's #1 USB-based authentication solution,
offering identity and access management tools that protect
sensitive data. Aladdin SafeWord two-factor authentication
technology protects companies' important information assets and
applications. Aladdin HASP SRM boosts growth for software
developers and publishers through strong anti-piracy protection, IP
protection, and secure licensing and product activation. Aladdin
eSafe delivers real-time intelligent Web gateway security that
helps protect data and networks, improve productivity, and enable
compliance. Visit www.Aladdin.com.
Safe Harbor Statement
Certain information presented herein constitutes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are subject to
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include general economic
and business conditions, risks relating to our recent acquisition
of Athena Smartcards and SafeWord and the pending acquisition of
Eutronsec, including the failure to realize expected synergies,
failure to effectively integrate these businesses into our business
and increasing unexpected liabilities, the loss of market share,
changes in the level of business or anticipated business from a
large customer or customers, failure to achieve anticipated
customer orders, changes in the competitive landscape, unexpected
costs associated with one time corporate events and other factors
over which the company has little or no control. For more
information, please refer to the Company's filings with the
Securities and Exchange Commission, which are available on the
Commission's website at www.sec.gov.
�2008 Aladdin Knowledge Systems, Ltd. All rights reserved. HASP,
eToken, eSafe, Aladdin Knowledge Systems and the Aladdin logo are
trademarks or registered trademarks of Aladdin Knowledge Systems,
Ltd.
Aladdin Press Contact: Matthew Zintel Zintel Public Relations
matthew.zintel@zintelpr.com 310.574.8888 Aladdin Company Contact:
Debbie Kaye Aladdin Corporate Communications
debbie.kaye@aladdin.com 646.468.0481 Aladdin Press and Investor
Contact: Jeremy Jacobs/Rachel Ferguson Joele Frank, Wilkinson
Brimmer Katcher jjacobs@joelefrank.com rferguson@joelefrank.com
212.355.4449
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