We've Got a case of bubble-itis and we're all happy (again)
And who said that the bubble couldn't strike twice in the same decade! We've followed the spam bubble for three years and it continues to grow. This time around it was Cisco's announcement that it would acquire IronPort for $830M. Since March, 2004, we've counted eight anti-spam startup company acquisitions in excess of $1.6B. Cisco's purchase price of IronPort accounts for about half of the total. Coming just six months after Secure's acquisition of CipherTrust, the eight times sales purchase price either makes Cisco look high or Secure look like geniuses for getting such a good deal -- time will tell. It's important to put these numbers in perspective -- the total market for spam add on product sales in 2006 was around $1B. Cisco claims that the market is twice that size but maybe we're counting different things. If the market is still growing fast, let's say 40% a year, then you're talking about a $5B market and, if Cisco's IronPort unit can grow its share above 30% then that's a tidy $1.5B annual revenue stream. But cut that growth in half and you're left with annual sales five years out less than what they paid to get into the business. In either event, right now there's plenty of champagne to go around -- investors in all of these anti-spam companies have made money -- some far more than others. But investors in the 25+ other companies anti-spam companies may start worrying since they are now competing in a market where both Cisco and Microsoft each want to grow share. With Secure Computing and Symantec holding sizable market share as well, the tier 2 and 3 players will soon start to struggle. Here's our updated "Spam Hall of Fame" table.
Date Acquiree Acquirer Amount Estimated Sales Multiple 3/04 Corvigo Tumbleweed $38.5M ? 6/04 Brightmail Symantec $370M 7x 7/04 TurnTide Symantec $31M ? 7/05 FrontBridge Microsoft ??? ??? 7/06 BlackSpider SurfControl $38M 5x 7/06 CipherTrust Secure Computing $279M 3.7x 1/07 IronPort Cisco $830M 8x Total $1.614+B
