MCAF ($35-$23) p/e none...Reports Q4 (Dec) earnings of $0.09, four cents better than the Multex consensus of $0.05; revenues were $18.6 mln vs the consensus of $17.8 mln.
Thursday January 17 01:19 PM EST
Earnings Point to Explosion in Internet Security Services
By Robyn Weisman, www.NewsFactor.com
Quarterly earnings reports released by several major antivirus and Internet security firms on Wednesday underscored the prominence that online and network security has gained over the last two years, according to analysts.
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Jan Sundgren, industry analyst for Giga Information Group, told NewsFactor that momentum in this sector has been building since the release of the Love Bug virus in 2000, still the costliest outbreak so far.
In 2001, the upsurge in increasingly sophisticated viruses coupled with the events of September 11th, has brought security concerns to a head, and as a result has boosted the industry profile significantly, said Sundgren.
"Security used to be an afterthought for most companies, but as more processes are taken online, more companies realize" its importance, Sundgren said.
IT Spending a Factor
According to Sundgren, studies have shown that enterprises have put security protection at the top of their IT spending priorities and have started to increase security spending to reflect this concern.
As a result, said Sundgren, the IT security industry is making significant gains despite the sputtering economic climate.
On Wednesday, major security vendors McAfee.com (Nasdaq: MCAF - news) and Symantec (Nasdaq: SYMC - news) announced revenues and earnings that outstripped analysts' expectations, and both predicted increased earnings for fiscal year 2002.
"This has been a terrific year for everyone at McAfee.com," McAfee CEO Srivats Sampath said in a prepared statement. "We delivered on our commitments and executed flawlessly."
Other security vendors, including McAfee parent Network Associates (Nasdaq: NETA - news), will announce their earnings over the next several days.
Security Gold Rush
Because of the opportunities presented by an increased focus on security, many new companies are flooding the marketplace, and some vendors are reinventing themselves as security companies to take advantage of the opportunity, Sundgren said.
"A lot of players are rushing in, and I constantly get press releases from these companies that say they have a new product that takes a 'unique approach' to security," Sundgren said. But, he added, competing companies often send him information on very similar products.
These companies "often have more competition than they realize," Sundgren said. "There's a lot of business to go around, but not for everyone. There is room for several big winners, but not all are going to succeed."
The Big Three
Sundgren went on to say that opportunities in IT security were identified some time ago and that, depending on the particular sector, certain brands have already gained a foothold.
In the antivirus arena, three or four companies, including Network Associates, Symantec and server leader Trend Micro dominate the market, with a gaggle of smaller players competing as well.
"People gravitate to the brands they know, as they have always," said Sundgren.
But given the relative newness of the industry, there is still room for multiple players, Sundgren said, adding that no Microsoft equivalent dominates the industry yet. |
