Hacking the Pentagon With $26

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The U.S. has long staked its defense capabilities on being the top-dog in cutting edge military technologies. However, hard lessons learned on the ground in Iraq are now being transferred to our aerial capabilities too; notably, that cheap counter-measures can often offset advanced designs. As The Wall Street Journal reports, U.S. drone communications are being intercepted with cheap off-the-shelf software.

Militants in Iraq have used $26 off-the-shelf software to intercept live video feeds from U.S. Predator drones... Senior defense and intelligence officials said Iranian-backed insurgents intercepted the video feeds by taking advantage of an unprotected communications link in some of the remotely flown planes' systems.

As Foolish defense writer Rich Smith (TMF Ditty) commented, "Seems the Pentagon is following the French "Maginot Line" of excuses -- yeah, we knew they could just go around it, but we didn't think they'd think of that."

Kidding aside, while you'd hope a fix that secures communications would be relatively simple to implement, the problem does highlight the growing threat of cybersecurity. As the military becomes more reliant on advanced data connections, the ability to encrypt and protect that data has become a top priority. Secretary of Defense Robert Gates has warned that the U.S. is woefully underprepared in this arena, as did retired general Wesley Clark in an essay featured in Foreign Affairs last month.

So what does this mean for investors? While the market for defense-related cybersecurity solutions is currently small, it's set to grow at a fast pace. However, many defense companies already derive a large portion of their revenue from information related work (e.g., Lockheed Martin's (NYSE: LMT  ) Information Systems & Global Services division accounts for nearly 30% of revenue), maintaining a dedicated presence in this expanding field is a must. Boeing (NYSE: BA  ) opened its cyber unit in August of last year, and Lockheed followed suit a couple of months later. Other major contractors such as Northrop Grumman (NYSE: NOC  ) , SAIC (NYSE: SAI  ) , and L-3 (NYSE: LLL  ) are also in the space.

The point is: It's not enough to merely maintain a presence in cybersecurity; look for contractors who are placing the most emphasis on their efforts. While the headline sales figures for cybersecurity might look small, the benefits touch a much larger part of the business.

Care to agree or disagree? Have some thoughts about cybersecurity on your mind? Leave them in the comments area below!

Eric Bleeker owns shares of no companies listed above. SAIC is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy that's known by its nickname, Juice Box, in parts of the Northeast.

Read/Post Comments (3) | Recommend This Article (14)

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  • Report this Comment On December 17, 2009, at 7:21 PM, lcashdol wrote:

    I guess no one has heard of SSL encrypted connections? Nice job.

  • Report this Comment On December 18, 2009, at 11:50 AM, TideGoesOut wrote:

    What this really shows is the level of "they're just a bunch of savages" mentality that continually spells trouble for the US (and other western) military efforts. I remember, at the start of the first gulf war, the shock and amazement that the enemy was using cellphones as IED triggers. Never underestimate your business or in war.

  • Report this Comment On December 18, 2009, at 5:12 PM, busterbuddy wrote:

    Well part of the problem is Gates himself and the Pentagon. Everyone knows you should have some level of encryption on the video. But Military Civil Service and Labs and program offices play with this SW for years and then push it out quickly to get more funding for their labs.

    And the Army wants to get things to the field quickly which is very reasonable. But they don't listen we people tell them, this is going to be a problem. They ignore it.

    The reason we are having these problems is because those working in the Military industrial complex today are young and smart but not wish to these type of problems. And the Information Security army of the Military are not well lets say, The type of people interested in getting the best product out the doors.

    Don't bet on the big companies, look for small companies with niches. They are going to get bought up.

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