Recs

5

McAfee Shows Internet Security Is Hot, Hot, Hot!

By Anders Bylund | More Articles
July 31, 2009 | Comments (2)

I've got two big-money investing ideas for you today:

  1. Start a cloud-based email security service. One of the big boys will buy you out, making you an instant multimillionaire.
  2. If that's too hard, just invest in computer security stocks. McAfee (NYSE: MFE  ) could be a good place to start.

McAfee is a rare beast because the company is growing as if there were no recession. Second-quarter sales got an 18% boost year-over-year to $469 million. Adjusted earnings followed suit with a 15% jump to $0.60 per share. CEO Dave DeWalt is flaunting "continued market share gains" alongside records in sales, profits, and long-term contract revenue.

That kind of performance makes investors sit up and take notice. McAfee's shares have gained 39% over the last year, including a better than 6% boost on the back of this report. Meanwhile, the S&P 500 benchmark dropped 22%, and chief McAfee rival Symantec (Nasdaq: SYMC  ) suffered to the tune of 28%. If stock performance is any indication -- and I do believe it is -- then McAfee is clearly a best-of-breed investment in the security sector.

A strong earnings report isn't the only fuel in McAfee's rocket boost today, though. The company also announced that it is buying privately held email security specialist MX Logic for $140 million, plus up to $30 million of performance-based incentives later on. MX Logic's software-as-a-service platform puts it solidly in the online cloud, where it competes with some familiar names.

  • Postini, arguably the market leader in cloud-based email security, has been part of Google (Nasdaq: GOOG  ) since 2007, and is tightly integrated into both Google Apps and Gmail. That was a tidy $625 million buyout.
  • Symantec bought Messagelabs last year to roll its services into the Symantec Protection Network product line. That was a $695 million deal.
  • How about Frontbridge? You may know that security service better as Microsoft (Nasdaq: MSFT  ) Exchange Hosted Services, as of 2005. Terms of that deal were not disclosed.

McAfee also updated its report on email spam this week, noting that spam volume has more than doubled since March and stands at record levels. Perhaps that trend inspired the MX Logic deal -- email security is hot, hot, hot.

So if you can't make up your mind between McAfee, Blue Coat Systems (Nasdaq: BCSI  ) , and Check Point Software (Nasdaq: CHKP  ) , you could always roll out your own email filtering service and hope for the best. Maybe Oracle (Nasdaq: ORCL  ) needs another security system?

But most of us should probably just stick with the stocks.

Further highly secure Foolishness:

Start investing today -- just $7 per trade with Scottrade. Or find the broker that's right for you.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Check Point Software Technologies and Google are Motley Fool Rule Breakers recommendations. Microsoft and Symantec are Motley Fool Inside Value picks. Try any of our Foolish newsletters today, free for 30 days. Go over to Motley Fool CAPS to find out why our supercomputer has awarded McAfee a measly two-star rating and tell us why that's right -- or wrong.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 03, 2009, at 6:40 PM, UltraContrarian wrote:

    SYMC really sucks and is overpriced. I don't understand how they are even a 2 star stock. Internet security may be hot hot hot but they are cold cold cold.

  • Report this Comment On October 19, 2011, at 10:39 PM, MHedgeFundTrader wrote:

    I immediately recognized Robert Mueller as the kind of no nonsense, ex-Marine, Vietnam Vet that he was, the kind of officer who used to rip your guts out for disobeying a direct order, which in my case was frequently. President Obama thought this is the man you want for your Director of the FBI, which is why Mueller survived as one of the few holdovers from the Bush administration.

    The Internet is not just a conduit for commerce, but also for crime and terrorism, and the bad guys are checking your doorknobs every day. Information is power, and fiber optic cable is a weapon. Terrorists, in particular, love the new Google Earth application. Only that morning, Mueller busted an American-Egyptian phishing ring, arresting 50, which looted 5,000 US accounts for $50 million.

    We all must take ownership of the cyber security problem through the vigilant use of antivirus software, firewalls, sophisticated passwords, and constant patches. Tracing a 75 cent accounting discrepancy at UC Berkeley led to the smashing of a German industrial espionage ring that was tapping into university computers. Teenaged kids, like the Canadian who launched the biggest “denial of service” attack against E-Trader and E-Bay, are to be feared. Be careful what you post on your Facebook page because it may kill a job prospect years down the road.

    The FBI is now embedding agents in police departments in Eastern Europe and China to take the fight global. When I got home, I immediately backed up all my files, reset my passwords, and bought my fourth antivirus program. I also installed bars on my windows and set booby traps on the front lawn for good measure.

Add your comment.

Compare Brokers

Fool Disclosure

DocumentId: 955179, ~/Articles/ArticleHandler.aspx, 5/27/2012 10:26:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 12,454.83 -74.92 -0.60%
S&P 500 1,317.82 -2.86 -0.22%
NASD 2,837.53 -1.85 -0.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
MFE.DL $0.00 Down +0.00 +0.00%
McAfee CAPS Rating: **
MSFT $29.06 Down -0.01 -0.03%
Microsoft Corp CAPS Rating: ****
ORCL $26.14 Up +0.02 +0.08%
Oracle Corp. CAPS Rating: ****
SYMC $15.08 Up +0.13 +0.87%
Symantec Corp CAPS Rating: **
BCSI $0.00 Down +0.00 +0.00%
Blue Coat Systems,… CAPS Rating: ***
CHKP $52.26 Down -0.04 -0.08%
Check Point Softwa… CAPS Rating: ****
GOOG $591.53 Down -12.13 -2.01%
Google CAPS Rating: ****

Advertisement