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EMC Pockets Network Intelligence

EMC Corp. (NYSE: EMC) has plunked down $175 million in cash to purchase Network Intelligence Corp. of Westwood, Mass., in a move aimed at bulking up EMC's newly founded security division in Bedford, Mass.

The acquisition closed this morning, shortly after EMC announced it. In tandem, EMC said it also closed its $2.1 billion purchase of RSA Security Inc. (Nasdaq: EMC), announced in June. (See EMC Acquires RSA and RSA Stockholders OK Deal.) To complete the RSA deal, EMC took out a $2.2 billion unsecured credit facility.

When the RSA buy first surfaced, analysts questioned EMC's enormous investment in its new security division (called officially "RSA, the security division of EMC"), headed up by Art Coviello, RSA's former CEO, who is now an EVP of EMC reporting to CEO Joe Tucci. Some thought EMC was spending too much, getting too far afield of its basic bread and butter. (See Did EMC Overpay?.) Today's purchase of Network Intelligence shows EMC isn't listening.

"Information security continues to dominate the spending intentions of CIOs around the world," Tucci said in a prepared statement.

Network Intelligence's 125 employees will stay with EMC and remain at their present site, though they'll make the newly hatched RSA division into a 1,500-person effort, since RSA itself had about 1,300 employees. Network Intelligence's CEO, Jack Sweeney, will continue to lead his group and will work for Coviello. All Network Intelligence products will eventually take on the RSA brand name.

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