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In a new study on cybercrime and data breaches, Verizon Communications Inc. (NYSE:VZ) plans to examine the risks surrounding mergers and acquisitions.
The Verizon Business Risk Team advised attendees of the Gartner Information Security Summit about "the latest shifts in hacking and other threats targeting public- and private-sector organizations," on Tuesday. The team reported that 13% of the breaches it examined in 2008 involved companies that had recently been involved in M&A. "It's difficult to draw a conclusion from this statistic or assign any significance to it -- yet the potential effect of such changes on the likelihood of suffering a breach is worth considering," the report stated. Of course, Verizon has extensive first-hand experience as a buyer and a seller. It's simultaneously spinning off operations in 14 states and merging the businesses with Frontier Communications Inc. (NYSE:FTR) in a $8.6 billion deal. The telecom bought Alltel Corp. for $28.1 billion in January. And it's business services unit is basically the old MCI Corp., which it acquired in 2006 for $8.5 billion. The telecom observes, "Mergers and acquisitions bring together not only the people and products of once separate organizations, but their technology environments as well. Integration rarely happens overnight or without a hitch." While not examples of data breaches, two of Verizon's recent divestitures illustrate the difficulty of integrating and transferring complex systems. FairPoint Communications Inc. (NYSE:FRP) merged with Verizon units in Maine, New Hampshire and Vermont in 2008, and it has struggled with billing, customer care and other systems. Hawaiian Telcom Communications Inc., which Carlyle Group bought from Verizon for $1.6 billion in 2005, sought bankruptcy protection in December, and it had challenges establishing its own systems. Verizon noted that the divestitures did not involve data breaches, but otherwise declined to comment. As for M&A, data breaches and cyber security, Verizon's Business Risk Team will continue to study any connections. "We added it to our case metrics with the idea that it might reveal something more substantial over time and we will continue to record and report it," the telecom stated. - Chris Nolter Get the details about the Verizon presentation on cybercrime, with a link to the report
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