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Hack attack bad news is good news for Net security stocks

RSA Security shares scampered up 5, or 9 percent, to 58 Wednesday as investors jumped on it and other security software vendors in the wake of a recent attack on major Web sites
Written by Larry Barrett, Contributor on

In the past two days, a number of prominent Internet sites have experienced service outages for several hours. Yahoo!, eBay, Amazon.com, CNN.com and Buy.com have all been victimised this week.

The FBI, which is investigating, announced a news conference today to discuss the attacks. But the attacks were a dramatic demonstration of the Internet's vulnerabilities and the ease with which determined hackers can wreak havoc across the global computer network.

RSA Security provides enterprise network and data security solutions, helping companies to conduct business securely online.

While most of the companies under siege have seen only a modest dip in their stock prices, experts say this latest bought with hackers demonstrates how far the industry still must go to protect online transactions.

Among other security providers, Secure Computing added 1 3/4, or 13 percent, to 14 3/4; VeriSign rose 5 1/2 to 194 15/16; ISS Group gained 2 15/16 to 76 13/16; Entrust Technologies moved up 1 1/16 to 64 7/8; Network Associates slipped 15/16 to 24 1/4; Symantec edged up 3/16 to 61 1/4 and Check Point Software Technologies trimmed 5/16 to 139 3/4.

"The attacks are driving home the importance of security," said Lawrence York, manager of the WWW Internet Fund.

York's top picks included Check Point, Entrust Technologies, ISS Group and RSA Security. All four of those companies deal with either Net security or virtual private networks.

He also singled out Keynote Systems, which is a Web site monitoring service. Its shares were up 5 5/16 to 118 7/8.

RSA posted a fourth-quarter profit of 23 cents a share on sales of $62m.

First Call consensus expects it to earn 19 cents a share in its first quarter and 87 cents a share in the fiscal year.

Its shares moved up to a 52-week high of 80 in December after falling to a low of 14 1/4 in March.

Eleven of the 16 analysts following the stock maintain either a "buy" or "strong buy" recommendation.

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