Cyber-Crime: A "New World"
06/02/2006 12:00 am EST
"The problem of cyber-crime is huge and growing," says Michael Murphy in his New World Investor. "The opportunity for companies that can make our lives more secure in every area is massive." Here, the technology expert looks at one company poised to benefit.
"Within our New World service, we maintain a portfolio based on stocks that are set to profit from the ‘MegaShift’ to increase personal security. If you're nervous about having your identity stolen, you're not the only one, and that's why these stocks should do quite well over the next few years.
"Granted, the security stocks have had a dull year because there haven't been any recent terrorist threats, large-scale viruses or even significant hacker attacks. While I don't wish for any of those to happen, the reality of the modern world is that they will. When they do, all of these stocks will suddenly come back into favor.
"Symantec (SYMC NASDAQ) has completed the integration of the Veritas and Symantec sales forces, and restructured the company internally to match sales efforts to channels. It certainly seems to be paying off, as in the March quarter they did more than 1,100 transactions valued at $100,000 or more, including 91 worth more than $1 million each. People think of Symantec as Norton Security, selling one software box at a time. Not so.
"The company now has a whopping 60,000 partners reselling their products in 37 countries— resellers, system integrators, OEMs, consultants and so on. That's an asset you won't find on the balance sheet, yet it takes years to build a distribution structure like that. The company is adding compliance as a major new area of focus, adding to their leading positions in antivirus, antispam, storage security and network protection.
"Wall Street's boredom with security stocks during relatively peaceful times has driven SYMC down to 15X earnings and 1.2 times hard book value of $13.32 a share, which includes $2.75 a share in cash. Even the value stock buyers are looking at it. The company presented at a J.P. Morgan conference on May 22, a UBS conference on May 23, and a NASDAQ London conference will be held on June 20. Buy SYMC up to $18 for a move to $28 during the next security crisis."