Security device manufacturer buys Va. firm

October 26, 1994|By Michael Dresser | Michael Dresser,Sun Staff Writer

Information Resource Engineering Inc., a Baltimore-based manufacturer of security systems for computer communications, moved to soup up its product line yesterday as it bought a Virginia company that will help adapt its technology to high-speed digital networks.

IRE Chairman Anthony A. Caputo said the company will issue 240,000 new shares to pay for its acquisition of Connective Strategies Inc. (CSI), a privately held company in Chantilly, Va. At IRE's closing price of $11.375 yesterday on the Nasdaq, the deal would be valued at $2.7 million.

Mr. Caputo said CSI's products are used to connect computers in remote locations via Integrated Services Digital Networks (ISDN), a form of digital switching that lets users transmit data over traditional copper wire at about 10 times the speed of conventional analog modems.

After years of hesitation, the nation's telephone companies have moved in recent years to roll out ISDN technology. For instance, Bell Atlantic Corp. officials say it is now available out of all its central offices.

"We view ISDN as the first of the high-speed technologies that will be deployed in volume," Mr. Caputo said.

In effect, CSI will bring speed to the merged company while IRE will supply the security.

"We'll combine the two technologies and end up with very high-speed, secure remote access to computer networks," Mr. Caputo said.

The Baltimore company said CSI will operate as a subsidiary for the time being but eventually will be integrated into the parent company.

IRE designs and markets products called Network Security Systems, which use encryption to prevent the interception of data as it moves from one computer to another.

Mr. Caputo said its products use a variety of encryption formulas, or algorithms, including the controversial government standard known as Skipjack, which allows a "backdoor" for law enforcement to decipher computer transmissions.

Last week, IRE announced that it had received a $500,000 order from an undisclosed government agency for its AX400 modem, which uses a powerful Skipjack-based chip known as Capstone to encrypt data transmissions. Capstone's counterpart for voice transmissions is known as the Clipper chip.

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