July 16, 1997 4:40 PM PDT

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Security Dynamics Technologies' (SDTI) stock traded higher today on strong earnings and news yesterday that the enterprise security firm is buying Sweden's DynaSoft for about $115 million in stock and cash.

The company's stock closed up 3-5/8 at 44-1/8 today on the news.

Security Dynamics, which bought the well-known encryption firm RSA Data Security in April 1996 for $200 million, is expanding its security offerings under its enterprise security services (ESS) strategy. Its core product is a line of hardware security tokens, both PCMCIA cards marketed as SecurIDs and smart cards in 1998.

"We will reach that vision of enterprise security services much faster by virtue of this acquisition," said David Powers, Security Dynamics senior vice president. "Whereas our traditional mission was secure remote access to corporate networks, now our mission is secure information access. It's quite a good fit, not taking us in any new direction." He estimates Security Dynamics traditional remote access market is still growing 30 to 40 percent a year.

DynaSoft, which has 85 employees and expects revenues of about $15 million this year, specializes in access to data within a corporate network, specifically at the application level.

DynaSoft's flagship product line is called BoKS, which includes single sign-on capabilities that allow users to log on a network and authenticate themselves once, then access appropriate information without logging in again. That eliminates the need to memorize passwords. DynaSoft recently signed licensing agreements with Sun Microsystems and Hewlett-Packard for its security software.

Security Dynamics will issue about 2.7 million shares of common stock plus $6 million in cash for the purchase, which will be accounted for as a pooling of interests.

In its earnings report yesterday, Security Dynamics beat Wall Street earnings estimates by a penny per share for the quarter ending June 30. Net income was $5.5 million or 15 cents per share, compared to $2.9 million or 8 cents per share for the same period last year. Revenues climbed 70 percent to $29.7 million from $17.4 million a year earlier.

The companies said they will provide details on how they will integrate their technologies in coming months.

DynaSoft's flagship product family, BoKS, aims to protect sensitive corporate information as companies move from secure internal networks to less secure intranets, extranets, and remote access over the public Internet.

 

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