Fortinet Scoops Up CoSine IP

Fortinet Inc. has acquired the intellectual property for the virtualized firewall/VPN platform of beleaguered vendor CoSine Communications for an undisclosed sum, according to sources familiar with the deal.

CoSine's technology, widely described as ahead of its time, was supposed to give carriers and service providers a way to offer managed security services and VPNs within the WAN cloud. But analysts said demand for such capabilities only began to emerge in the last few quarters, well after CoSine's 1998 debut, its 2001 IPO, and its abortive attempts to find a suitor in the interim.

Earlier this month, CoSine reported revenue of $579,000 and a loss of $126,000 for the quarter ending March 31. That compares to $897,000 in revenue and a loss of $878,000 for the same period a year ago. Terry Gibson is still listed as CEO for the company, which said in its May 3 filing that its business "consists primarily of a customer service capability operated under contract by a third party."

At its peak, CoSine had more than 500 employees and was "spending money like it was going out of style," says one analyst who asked not to be identified. The analyst pointed to "management issues" at a company reputed to have blown through $500 million in its eight-year span.

Fortinet, a vendor of firewalls and unified threat management (UTM) systems, is rumored to have paid less than $5 million for the CoSine technology. When reached for comment today, Fortinet officials said they could neither confirm nor deny the deal, or any details.

CoSine's technology should be complementary to Fortinet's high-end FortiGate firewall line, as well as its anti-virus, intrusion prevention system (IPS), filtering, and anti-spam services.

— Terry Sweeney, Editor in Chief, Dark Reading

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