A cyber attack against a major security company should be cause for investor concern. When the attack results in vital security information stolen, you'd expect an outright panic.
So why isn't EMC (NYSE: EMC) reeling from exactly that kind of event at its RSA security division? Goldman Sachs added the company to its vaunted "conviction buy list" over the weekend, so surely that has to factor into the stock's 4% jump today. A couple reasons spring to mind in explaining why EMC is still rocketing up:
- The RSA security system is sophisticated enough that just having the correct keycode isn't enough to get into a protected system. You also need a user-generated password or PIN code, which should have been stored separately from the affected codes. In short, the hackers have much work left to do in order to actually leverage their ill-gotten gains. RSA keys are still pretty darn safe.
- Not to scare anybody with a worst-case scenario here, but even if RSA's entire customer base lost their trust in the system and left today (won't happen), the damage done to EMC would be minimal. Only $729 million of EMC's $17 billion sales came from RSA last year.
So the RSA incident is pretty much a non-event for EMC at large, especially since no directly exploitable harm to RSA customers has been reported. So we're likely left looking at the Goldman Sachs upgrade as propelling the company forward today. The firm didn't just put a strong buy recommendation on EMC but also had plenty of good things to say about networked storage in general, and there's also an industry trade show going on that may fuel interest in these stocks.
This has all led to similar gains across the storage industry today, including jumps of 3% or more for Quantum (NYSE: QTM), Dot Hill Systems (Nasdaq: HILL), and Xyratex (Nasdaq: XRTX). Looks pretty clear that concern over the RSA hack is taking a back seat to enthusiasm over storage in general.
To follow the RSA fallout (or lack thereof), add EMC to your Foolish watchlist.
