After Cloudera Purchase, Computer Security May Be Hot Sector

NEW YORK (TheStreet) -- Intel's (INTC) investment in privately held Cloudera may be creating interest in Internet security firms among other companies that are involved in cloud computing, or the business of hosting data on remote servers.

In March, Intel invested $740 million in Cloudera, a company that sells software used to process reams of data, for an 18% stake. That was part of a $900 million funding round. This week, Cloudera splashed out some of that cash on Gazzang, which offers encryption of data housed on remote servers.

Cloudera's acquisition of Gazzang should put investors' eyes on security companies that have beaten-down stocks and that have a cloud angle, such as Barracuda Networks (CUDA), FireEye (FEYE) and even Symantec (SYMC).

Cloud computing is a tough business because Amazon (AMZN) offers cheap cloud services, as do to a lesser extent Google (GOOG) and Microsoft (MSFT).

But if companies offer Internet security along with their cloud services, corporate customers may be willing to pay more. That may help vendors such as VMware (VMW) and Red Hat (RHT) that offer proprietary or private cloud systems that compete with Amazon's public product.

And so VMWare may be in the market after killing its own security offering, called Heartbeat. Red Hat may also be in the market after recently adding Ceph to beef up Gluster, its free storage product. In short, more deals are likely.


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At the time of publication, the author owned shares in Amazon and Google.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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