RSAS--- Internet Encryption-- (the former SDTI)--VRSN --TTPA
RSAS has a price to sales of 8.2, a P/E of 10 ( the forward PE is stated to be 46)
RSAS has a 1 year Earnings Growth rate of 646%, A 3 yr EGRate of 108% and a 5 yr EGR of 74.6%
selling for 2.5 -3 times book value.
They may be able to really expand overseas sales of their products if Clinton's directive goes through.
VRSN and TTPA have both done well, VRSN has really been a moonshot.
I was long the old SDTI in Nov to Jan 1998-99, and kind of lost track of them for a while.
RSAS is an interesting company, that has a modest valuation.
John
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Internet Value?
Friday, December 03, 1999 7:17 PM
by Seth Berger
It's difficult to imagine Internet stocks as undervalued but the management of RSA
Security (RSAS) certainly thinks that its stock is. After a second look at RSA
Security, one might agree.
RSA Security is a behind the scenes Internet security company. Many of RSA's
technologies are used in other products. Almost every Internet shopper, or Netscape
user has used RSA Security's products without even knowing it.
RSA Security was formerly known as Security Dynamics and traded under the ticker
SDTI. In order to strengthen its brand identity, the company changed its name to RSA
Security in September. RSA offers consulting, training and support. RSA's flagship
products include SecureID, BSAFE, and Keon.
RSA SecureID is a two-factor authentication routine that a client uses to gain access
to a corporate information network. In conjunction with RSA's ACE/Server the
SecureID offers one of the most robust security solutions for corporations. The
ACE/Server is extremely scaleable and allows an administrator to issue thousands of
SecureIDs without worrying about server performance. The SecureID technology is
used by MCI Worldcom's (WCOM) UUNet and supported by 3COM (COMS), Axent
(AXNT), Check Point (CHKP), Cisco (CSCO) and dozens of other companies.
BSAFE is a set of development components for developing secure applications.
BSAFE is embedded in over 450 million copies of today's most successful Internet
applications, including Web browsers, commerce servers, email systems and virtual
private network products. BSAFE includes the popular SSL (Secure Socket Layer)
technology that enables secure purchases on e-tail web sites. For those investors that
like anything-Linux; RSA Security inked a deal for Red Hat (RHAT) to license RSA
BSAFE. Robert Young, CEO of Red Hat, said in a prepared statement, "Our use of
RSA Security's trusted e-security technologies in our products will help position Red
Hat Linux as one of the world's most secure platforms for conducting e-commerce."
Keon is RSA's public key infrastructure (PKI) system. It provides for the easy
management of digital certificates. Keon permits a corporation to support certificates
from various certificate vendors including Verisign (VRSN) and Netscape. Keon can
be deployed as a complete PKI system, or a standalone certificate authority. Add-ons
and development kits are available to make the system even more comprehensive.
RSA has had remarkably good relationships with companies. Nearly all leading
software and hardware vendors including Microsoft (MSFT), HP (HWP) and 3Com
create products that are compatible with RSA's protocols. Consequently, companies
such as GE (GE) have had little difficulties adopting RSA's products.
A significant amount of RSA's Q3 revenue has come from its sale of Verisign stock. (VRSN)
Verisign is a child of RSA's and was spun-off in 1995. As of September 30, 1999 RSA
owned approximately 3.2 million shares of Verisign and about 1 million shares of
Trintech (TTPA). This gave RSA cash and marketable securities valued at
approximately $669 million or $15.74 per share. Verisign and Trintech's rise in stock
price since September 30 has been over $100 per share, and $43 per share
respectively. This results in RSA having additional $363 million in marketable
securities or $8.54 per share. RSA stock has estimated cash of $24.28 per share, not
including ANY of the value of the business, technology, or products.
RSA's business has been partially restrained because of government regulation
regarding the
exportation of encryption software. The Clinton administration has released a
draft-proposal to relax the restrictions on encryption exports. The Department of
Commerce is expected to releases new regulations by Dec. 15. If the new regulations
are favorable, RSA could see considerable upward potential. Investors may not bid up
RSA's stock price immediately after the regulations are released, instead RSA may
have to release blowout earnings before investors take notice.
On October 14, RSA Security announced that it would repurchase up to 4 million
shares of its common stock over the next 12 months. In a press release, RSA said,
"The company believes that RSA Security's stock is undervalued and continues to
represent an attractive investment opportunity. "
RSA Security closed December 3, down 1/16 at $39.
----------------------------------------
BUSINESS SUMMARY RSAS provides enterprise network and data security
solutions, helping companies to conduct business securely,
protect corporate assets and facilitate electronic commerce.
For the 9 months ended 9/99, revenue rose 25% to $156.1M.
Net income totalled $142.6M, up from $16.8M. Revenues
reflect higher sales of RSA SecurID tokens, RSA ACE/Server
software, and RSA BSAFE cryptography products. Net income
reflects a $213.6M gain from the sale of VeriSign stock. |
