Updated from 11:25 a.m. EST
is selling off its underperforming security appliance business to
Check Point Software Technologies
, as the handset maker refocuses its efforts on its smartphone battle with
Nokia recently announced it was in advanced discussions to sell its security business, which has lagged for some time. The Espoo, Finland-based security revenues have been below 50 million Euros ($70 million) in each quarter of 2008, compared to total third-quarter revenue of 12.2 billion Euros ($17 billion dollars).
All of the firm's recent services and software growth has come from outside its security business, according to executives on a conference call to discuss Nokia's recent third-quarter results.
Nokia is also coming under fierce pressure from Apple in the smartphone space and is gearing up to better challenge its rival in 2009, recently unveiling its diminutive
Technology analyst firm
, for example, recently reported that Apple's smartphone sales grew more than 327% year-over-year, compared to a 3% decline at Nokia, so the stakes are high.
Nokia's shares fell 45 cents, or 2.9%, to $15.24 in afternoon trading Monday, as the Nasdaq slipped 1.13%. Investors initially warmed to Check Point's stock, which rose 12 cents, or 0.64%, to $18.74 in early trading, but enthusiasm waned in the afternoon, with the price down 14 cents, or 0.8%, at $18.48.
Neither Nokia nor Check Point has revealed the value of the security appliance deal Monday, although the two firms have worked closely together for a number of years. Nokia's security appliances, for example, already work with Check Point's firewall, virtual private network (VPN) and unified threat management (UTM) software.
Neither Nokia nor Check Point has revealed the value of the security appliance deal Monday, although Check Point CEO Gil Shwed estimates that the deal will contribute more than $100 million to the company's revenue in 2009, according to a report on Israeli news site
.The deal is expected to close in the quarter ending March 31, 2009.
The Nokia deal follows Check Point's 2007 acquisition of
and the Israeli company's attempt to buy software specialist
( FIRE) in 2006, which the U.S. government thwarted, citing national security concerns.
Sweetening the deal for Check Point is Nokia's extensive security appliance customer list, which numbers more than 23,000 customers worldwide and should present opportunities for selling additional security software.
"This business fits naturally with Check Point, and the combination will provide a great path forward for the thousands of customers who depend on Nokia security solutions today," explained Tom Furlong, Nokia's senior vice president of software and services, in a statement.
With about 85% of the Fortune 500 said to use Nokia's security appliances, Check Point is also positioning itself for the expected
of financial sector IT. Check Point is one of a number of security companies, including
( MFE), which stand to benefit from the technology refresh expected to follow the Wall Street bailout.