Micromuse Enters Into Agreement to Acquire GuardedNet Inc.

09.08.05

Micromuse Poised to Provide Industry’s Most Complete and Robust Security Information Management Solution for Enterprise and Service Provider Networks

Micromuse Inc. (Nasdaq: MUSE), the leading provider of ultra-scalable, realtime business and service assurance software, announced today that it has entered into an agreement to acquire GuardedNet Inc., a privately-held software company based in Atlanta, Georgia, for .2 million in cash. With the planned acquisition of GuardedNet, Micromuse broadens its technology portfolio to address the critical, growing market demand for security analysis, risk mitigation, incident management, and compliance software solutions.

Micromuse and GuardedNet were both recently evaluated in Gartner’s Magic Quadrant for Security Information and Event Management (SIEM)1. According to the Gartner report, the SIEM market is still relatively small and fragmented, with no single vendor dominant in installed base or annual revenue. The report, which positioned Micromuse in the “Challenger” quadrant and GuardedNet in the “Visionary” quadrant, predicts that the SIEM market will consolidate.

Micromuse believes that this is a key consideration as the planned acquisition of GuardedNet will significantly advance Micromuse’s position among today’s SIEM vendors by combining Micromuse’s global market presence and extensive suite of Netcool® business and service assurance solutions with GuardedNet’s innovative, best-of-breed technology for security and risk management.

GuardedNet, a pioneer in the rapidly evolving security management market, was founded by security software experts with vast experience developing solutions at companies such as Internet Security Systems (ISS) and Dun & Bradstreet Software. GuardedNet’s neuSECURE® product family delivers centralized security management, heterogeneous log aggregation, realtime incident detection and correlation, integrated investigation and response tools, and reporting for audit and compliance, including predefined reports for the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Gramm-Leach-Bliley Act, and Sarbanes-Oxley Act of 2002 (SOX). The neuSECURE platform has been adopted by organizations in many of Micromuse’s target markets, including twelve of the world’s foremost financial services companies, nine of the world’s leading telecommunications and wireless service providers, and several U.S. federal agencies.

The integration of GuardedNet’s security management technology into Micromuse’s Netcool suite will provide customers with unprecedented capability to assure services, monitor infrastructure, and mitigate security risks within a single, integrated management platform. According to Lloyd Carney, Micromuse Chairman and CEO, “today’s organizations increasingly rely on their networked infrastructures to deliver key business and revenue-generating services, making the security of these infrastructures increasingly important. Meanwhile, business demands and rapid technology changes dictate that network and security operations can no longer be allowed to function as distinct silos. Instead, these departments must seamlessly integrate information, knowledge, and tools used by both. As the industry’s leading provider of realtime business and service assurance solutions, we are committed to delivering a comprehensive, holistic solution set that assures the health, performance, reliability, and security of the business infrastructure.”

“neuSECURE has proven itself to be a scalable and feature rich SIEM platform based on years of security expertise from our product team,” said Tom McNeight, CEO of GuardedNet. “In Micromuse, we see a company that understands how to create innovative, vendor-agnostic management products and have them successfully dominate the marketplace. There is also a cultural affinity between these two organizations that makes me extremely optimistic about neuSECURE as a successful part of the Netcool product suite.”

The acquisition is subject to various standard closing conditions and is expected to close during the fourth quarter of Micromuse’s fiscal year 2005, which ends September 30, 2005. GuardedNet was founded in 1999 and has approximately 42 employees.

The transaction is expected to be accretive to GAAP and non-GAAP earnings per share for fiscal year 2006. Non-GAAP earnings per share excludes certain non-cash, non-recurring or acquisition-related charges, such as in-process research and development write-off, amortization of intangible assets, deferred stock-based compensation expense, restructuring charges and other non-recurring items. Micromuse will provide further detailed guidance during its third quarter earnings conference call.


About GuardedNet
GuardedNet delivers advanced enterprise security management and incident response solutions designed to improve the effectiveness, efficiency, and visibility of security operations and information risk management. Its software platform, neuSECURE, enables centralized security monitoring and incident management in heterogeneous security environments, improving corporate security and reducing operational costs. GuardedNet has received numerous accolades and was recently named a finalist in Network Computing Magazine's 2004 Well Connected Awards for outstanding performance in Security Information Management. GuardedNet's neuSECURE has also received Information Security Magazine's Hot Pick of the Month for a security product in February 2004. In 2003, GuardedNet was the recipient of Information Security Magazine's Horizon Award for Customer Satisfaction. GuardedNet is a private company, headquartered in Atlanta, Georgia. For more information about GuardedNet, please call 888-599-8297 or visit www.guarded.net.

About Micromuse
Micromuse Inc. (Nasdaq: MUSE) is the leading provider of ultra-scalable, realtime business and service assurance software solutions. The Netcool® software suite provides organizations with the assurance that their IT systems are supporting and driving profits 24 hours a day. Unlike traditional infrastructure management systems, Netcool solutions provide realtime end-to-end visibility and accurate troubleshooting from a business perspective. Such business intelligence allows organizations to respond to problems quickly, streamline workflow processes and improve business uptime. Micromuse customers include BT, Cable & Wireless, Deutsche Telekom, EarthLink, ITC^DeltaCom, J.P. Morgan Chase, MCI, T-Mobile, and Verizon. Headquarters are located at 139 Townsend Street, San Francisco, Calif. 94107; (415) 538-9090. The Web site is at www.micromuse.com.

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GuardedNet® is a registered trademark of GuardedNet Inc. All other companies, brand names or products are trademarks or registered trademarks of their respective companies.


Micromuse and Netcool are registered trademarks of Micromuse Ltd. All other trademarks and registered trademarks in this document are the properties of their respective owners. Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties.

The factors that could cause actual future results to differ materially from the forward-looking statements include the following: fluctuations in customer demand, the Company’s ability to manage its growth (including the ability to hire sufficient sales and technical personnel), the risks associated with the expansion of the Company’s distribution channels, the risk of new product introductions and customer acceptance of new products; the rapid technological change which characterizes the Company’s markets, the risks associated with competition, the risks associated with international sales as the Company expands its markets, and the ability of the Company to compete successfully in the future, as well as other risks identified in the Company’s Securities and Exchange Commission Filings, including but not limited to those appearing under the caption "Risk Factors" in the Company's most recent Quarterly Reports on Form 10-Q and on Form 10-K on file with the Securities and Exchange Commission and available on the Company's Web site.

Footnotes:
1) Gartner Research “The Gartner’s Magic Quadrant for Security Information and Event Management 2H05,” by Mark Nicolett and Amrit Williams, June 2005.

Magic Quadrant Disclaimer: The Magic Quadrant is copyrighted June 2005 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.