Young said the anti-malware technology and Sourcefire's newest generation of products designed to prevent intrusion into computer systems will break new ground for Cisco. And where the companies' products overlap, the customer bases are largely different, he said.

Cisco — with revenues of $46 billion in its last fiscal year, compared with Sourcefire's $223 million — does a lot more than cybersecurity. It sells routers, wi-fi technology, networking services and videoconferencing products, to name a few.

But the Sourcefire acquisition speaks to Cisco's decision to make security its top priority, Young said. It's a field with ever-increasing threats.

"When this is described as a war, it's not an overexaggeration," he said. "The inability for companies, for service providers and governments to defend against this type of attack can have disastrous consequences."

That's made cybersecurity a fertile sector for Sourcefire.

The company's revenue jumped 35 percent last year. Profit was down 19 percent, to $5 million, but only because the firm plowed $8.4 million more into research and development than it did the year before.

Sourcefire's stock price, meanwhile, was hovering around a record high of $60 a share before the Tuesday offer. The deal pushed values up to $75.49 a share at the close of trading.

But a few years ago, things weren't going so well. Sourcefire lost $5.6 million in 2007, its first year as a public company.

When anti-spam firm Barracuda Networks first offered $186 million and then $206 million to buy the company in 2008, the per-share price worked out to less than the $15 investors paid in the initial public offering. Sourcefire rejected both bids.

The company did like an earlier suitor. It accepted a $225 million offer from Israeli-based Check Point Software Technologies in 2005. But concerns about foreign ownership of a company providing cybersecurity to federal intelligence agencies scuttled the deal the next year.

By waiting seven years, Sourcefire ended up with an offer 12 times larger.

Ho, the William Blair analyst, noted that the deal comes about two weeks after McAfee closed on its $389 million acquisition of firewall firm Stonesoft and a month after a private equity firm paid $1 billion for cybersecurity firm Websense.

"The theme is, the larger companies have difficulty innovating," he said. "They rely on the smaller, newer companies to come up with ideas, and then they acquire them."

jhopkins@baltsun.com

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Baltimore Sun reporter Steve Kilar contributed to this article.

Sourcefire over the years

1998: Martin Roesch makes a program called Snort, which "sniffs out" network hackers and viruses, available for free online.

2001: Roesch founds Sourcefire in his Carroll County living room in order to produce a commercial version of Snort.

October 2005: Check Point Software Technologies Ltd., an Israeli company, announces plans to acquire Sourcefire for $225 million.

March 2006: Check Point abandons the acquisition after a federal panel begins investigating the deal. Federal officials opposed the acquisition, fearing it could result in the exposure of the government's network practices.

October 2006: Sourcefire applies to list its common stock on Nasdaq under the ticker symbol FIRE.

March 2007: Sourcefire's stock debuts and closes at $15.49, up 3.2 percent over the IPO price.

February 2008: CEO E. Wayne Jackson III announced his departure from the company after fourth-quarter profit dropped 59 percent.

June 2008: Barracuda Networks Inc. offers to buy Sourcefire for $206 million. Sourcefire rebuffs the bid.

July 2013: Cisco announces it is acquiring Sourcefire for $2.7 billion.

Source: Baltimore Sun archives