Fighting the Good Fight Against Cybercrime

11/18/2009 11:00 am EST

Focus: STOCKS

Gregg Early

Managing Director, Fresh Eyes Media

GS Early, executive editor of Personal Finance, says a security company is particularly well-positioned to profit from the endless war against viruses, worms, and cybercrime.

In today’s increasingly computerized world, there are more worms, viruses, malware, and hacks than in the real world. Cyberspace is full of riches for terrorists, thieves, mischief makers, and foreign intelligence sources. And the US is behind the curve in implementing plans to thwart these threats.

The cover story in the September 2009 issue of Armed Forces Journal, the oldest defense publication in the US, focused on cybersecurity threats and strategies. Here are some stunning facts from the piece:

  • The FBI ranks cybercrime as the third-greatest threat to US national security behind nuclear weapons and WMDs.
  • The nonprofit US Cybersecurity Consequences Unit estimates that the destruction from a single wave of cyberattacks on critical infrastructure could exceed $700 billion, the equivalent of 50 major hurricanes hitting the US simultaneously.
  • The Department of Homeland Security estimates that there were 37,000 cyberattacks in the US in 2007—up 800% from 2005.

In Russia, a group of cybercriminals have hacked ATM cards so that they can put one of their hacked cards into a cash machine and withdraw all the cash along with all the PIN numbers and bank account information of the customers that have used the machine.

Hacked machines are popping up in Europe now, which means the threat isn’t limited by borders.

Military brass, top government officials, and corporate titans admit that the US is playing catch-up to the ever-expanding cyberthreats that continue to proliferate like mayflies in the spring.

But where there are substantial risks, there are corresponding opportunities. And cybersecurity’s time is upon us.

While the word “cybersecurity” is all-encompassing, there’s no silver bullet for the multifaceted challenges of securing data in various public and private institutions. What’s more, malefactors access data with different motivations, but all have to be stymied.

One of the biggest fish in the data security business is McAfee (NYSE: MFE). The firm is ubiquitous in the PC market and has made major inroads into securing US government agencies’ networks.

The latter business should provide the growth kicker, even though it’s the accompanying security software for Microsoft’s (NSDQ: MSFT) new Windows 7.

The PC business is increasingly fragmented, and Windows doesn’t command the market share it did a decade ago. It’s a good business, but government contracts are McAfee’s ticket to long-term growth. McAfee is a buy below $47. (It closed above $42 Tuesday—Editor.)

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