AT&T buys VeriSign consulting biz

The sunken economy will likely only improve business for AT&T Inc.’s latest acquisition: VeriSign Inc.’s Global Security Consulting Services.

AT&T bought the unit Oct. 1 for an undisclosed amount.

“As security vulnerabilities and threats increase during a downturn in the economy and compliance regulations become more stringent and organizations look to cut [costs], the security services market will reveal strong customer demand for security consulting and security operations services,” predicted Irida Xheneti, a research analyst at IDC, in a report released earlier this year.

IDC estimates the annual enterprise information technology security services market in the United States at $11.7 billion, with the security consulting services market accounting for $3.6 billion of that total.

The U.S. security services market is expected to grow at an annual rate of 15.9 percent, Xheneti said.

AT&T’s recent acquisition “aligns VeriSign’s security consulting experience in comprehensive risk assessment with AT&T’s suite of network-based cybersecurity services,” AT&T officials said in a statement.

VeriSign’s consulting business includes practices in telecommunications, media and entertainment, enterprise wireless and mobility, global supply chain consulting, and global security consulting.

"The combined capabilities of VeriSign's security consulting business with AT&T's global reach, networking, and security portfolio will broaden our consulting and risk analysis expertise, and enable us to more quickly develop and bring to market capabilities to address the evolving security needs of businesses around the world," said Ron Spears, chief executive officer of AT&T Business Solutions, in a statement.

The acquisition is also in line with advice to start getting ready for the technology industry’s recovery in 2010, from analysts such as Forrester Research Inc.’s Andrew Bartels. “Smart vendors will keep investing in research and development,” Bartels said in a report published in April. “If you’re a large public company, cutting R&D investment or squeezing clients to try to maintain profit margins and impress shareholders will be a fool’s game,” he said.

Acknowledging the importance of continuing research and development efforts, Spears said in a statement that “AT&T has long been a pioneer in the development of cybersecurity services and capabilities, with AT&T Labs and its cybersecurity organization working closely together to provide industry-leading enterprise services and technology.”

Although the terms of the deal were not announced, it’s likely that AT&T, a holder of General Services Administration Networx Universal and Enterprise contracts, got a bargain. Between 2004 and 2006, VeriSign paid close to $1.3 billion for about 20 businesses, which it has been selling off as part of a restructuring plan and for which it will receive about $750 million, said Thomas Rasmussen, a research associate at the 451 Group.

Just days earlier, AT&T bought mobile Web application developer Plusmo Inc., based in Santa Clara, Calif. The terms of the deal were not disclosed.