Microsoft, HP to Chase Security?

Publicly listed mid-cap security companies had better watch out.

IBM’s $1.3-billion of acquisition of Internet Security Systems earlier this week is likely to spark a race among large IT players to add a strong security component to their line of products, setting off a frenzy of mergers and acquisitions in the space. Their targets? Security companies with between $200 million and $700 million in market capitalization and a rocky performance on the stock market in the last few months. More such deals could be on the way, said experts. Mid-tier pure-play security companies are likely to be snapped up by larger players that want to round off their portfolios.

Wall Street seems to be betting on it. Shares of ISS went up roughly 40 percent after the EMC-RSA buy.

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