Buying HP’s TippingPoint business and entering network security (2015)

From a company that saves to a company that buys and absorbs

At the centre of this decision lies one answer to a long-standing question: what to do with the cash a debt-free company had accumulated. Since listing, Trend Micro had avoided large acquisitions and directed its funds to dividends and buybacks instead. Buying TippingPoint outright — a network-security asset with both scale and a track record — was a shortcut, faster than building the same thing from nothing in-house. Taking in its zero-day research organization along with it meant acquiring not only technology but intangible assets: standing within the industry, and a network of researchers.

Whether the transaction was right, however, remains a question that a single year’s results cannot measure. The revenue growth immediately after the purchase appears to have been the starting point of the platform building that runs on into XGen and Trend Vision One, but reconciling that with the light-footed management cultivated as an endpoint specialist — including the burden of amortizing goodwill — remains a matter to be lived with for a long time. How a company that had kept its guard up by staying debt-free will work the weight of intangible assets, borne for the first time, into its management is not something this one episode can settle.