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CA Pours More Cash Into Data Security

James Rogers

Computer Associates(CA Quote) continued on its acquisition tear Monday, announcing an agreement to acquire privately held software specialist Orchestria.

Like many software firms, CA's shares have taken a pounding during the economic downturn, although the Islandia, N.Y.-based firm's stock has rallied somewhat in recent weeks. The Orchestria purchase is CA's third security acquisition in three months, following recent deals for Eurekify and IDFocus.

CA's shares closed down 25 cents, or 1.3% to $18.65 Monday despite the announcement.

Orchestria sells data loss prevention (DLP) software, which controls end-user access to corporate information and has been identified as a key technology for 2009.

Economic downturns typically coincide with an upsurge in criminal activity, particularly identity theft, raising the profile of technologies that can lock down data. DLP software is also expected to come into play if the U.S. government tightens regulation of the financial sector during the coming years.

Other companies touting DLP technology include Symantec(SYMC Quote) , Websense(WBSN Quote), Cisco(CSCO Quote), and McAfee(MFE Quote), which acquired privately held Reconnex for $46 million last August.

CA is now looking to combine Orchestria's software with its existing identity and access management offerings in an attempt to access users' data.

"With this acquisition, CA will deliver one of the broadest and most advanced information security solutions in the market today, and address the demand for a new generation of identity and access management," said Dave Hansen, general manager of the firm's security management business.

As with its other acquisitions, CA did not reveal the value of the Orchestria deal, although the firm is currently ranked fourteenth on consulting firm Deloitte's list of the 50 fastest-growing tech, media, telecom and life sciences companies in New York state.

To qualify for the Deloitte list, companies must have had operating revenues of at least $50,000 in 2003 and $5,000,000 in 2007, so the startup's software is clearly gaining traction. Founded in 2000, the New York City-based firm has more than 500 customers, which include investment banking firmScott & Stringfellow and Raymond James Financial. Orchestria recently claimed revenue growth of 2,600% between 2003 and 2007.

In addition to the recent upheaval in the U.S. financial markets, tech companies are also eyeing opportunities for their DLP products overseas. The U.K. government, for example, suffered an embarrassing data breach a little over a year ago when the country's tax agency lost disks containing the personal details of some 25 million people, which is almost half of the entire U.K. population.

With the media desperate to fix their spotlight on any organization that loses sensitive customer or client data, companies such as CA, Symantec and McAfee have clearly identified DLP software as a strong revenue stream for the coming years.

"Data breaches are embarrassing, painful and costly -- no matter where your organization resides," wrote Thomas Raschke, an analyst at technology research firm Forrester, in a note last year. "Enterprises risk losing customer confidence, reputation and shareholder value, and the impact of an extensive leak of corporate data could result in losses of similarly epic proportions for their business."