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AT&T Unit to Buy AlienVault to Boost Cybersecurity Portfolio

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AT&T Communications, part of AT&T Inc. (T - Free Report) recently announced that it plans to acquire AlienVault to augment its line of cybersecurity products designed for small and medium-sized businesses. AlienVault is a privately held computer security firm based in San Mateo, CA.

While both the companies have approved the agreement, the terms of the deal remained undisclosed. The transaction is expected to close in the third quarter of 2018, subject to customary closing conditions. Until then, the two will operate independently.

AT&T to Benefit From This Deal

AT&T Communications is made up of AT&T Business, Mobility & Entertainment and Technology & Operations. After the recent merger with Time Warner, it intends to create the best entertainment and communications experiences in the world. The successful integration of AlienVault will allow AT&T to enhance its enterprise-grade security solutions portfolio and offerings to millions of small and medium-sized profit-making organizations.

In today’s digital world, businesses need a cyber risk management strategy to minimize their exposure to risks. With AlienVault's threat intelligence expertise, the telecommunications giant will be able to improve its ability to help organizations detect and respond to cybersecurity attacks. AlienVault's innovative technology and security talent will help accelerate AT&T's vision of equipping organizations, regardless of size or industry, with effective cybersecurity solutions.

The buyout will synergize AlienVault's expertise with AT&T's cybersecurity solutions portfolio that includes threat detection and prevention as well as response technologies and services. After the acquisition closes, AT&T business customers will be able to access the unified security management platform that helps make organizations more effective at threat detection and response. AlienVault will be a significant part of AT&T’s Edge-to-Edge Intelligence capabilities.

However, the addition of AlienVault is not expected to have material effect on AT&T's results. It does not change the company's plans to reduce its net debt to adjusted EBITDA ratio to the 2.5 range by the end of the first year after the close of the Time Warner deal.

AT&T intends to invest in and build on AlienVault’s foundational Unified Security Management platform and Open Threat Exchange as the company integrates AlienVault into its cybersecurity suite of services. The company is also making investments pertaining to advanced threat detection and analysis, threat intelligence and virtualized security functions.

Share Price Performance

In the past three months, shares of AT&T have lost 7.6% compared with a decline of 0.2% for the industry.

Zacks Rank and Stocks to Consider

AT&T currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader industry include Comtech Telecommunications Corp. (CMTL - Free Report) , Micron Technology, Inc. (MU - Free Report) and Juniper Networks, Inc. (JNPR - Free Report) . While Comtech and Micron sport a Zacks Rank #1 (Strong Buy), Juniper carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.              

Comtech has a long-term earnings growth expectation of 5%. It beat earnings estimates in each of the trailing four quarters, the average being 123.7%.          

Micron has a long-term earnings growth expectation of 8.2%. It beat earnings estimates in each of the trailing four quarters, the average being 5.9%.   

Juniper has a long-term earnings growth expectation of 5.7%. It exceeded earnings estimates thrice in the trailing four quarters with an average positive surprise of 3.4%.

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