Symantec broadens scope as viruses move beyond PCs

So Symantec today announced plans for new antivirus software for handheld devices running the Palm operating system.

With the recent virus attack on mobile phones in Spain, Symantec, which has historically focused on PC security, is developing technology for all handheld devices, from Palm personal digital assistants to cell phones.

Although no viruses have attacked Palm devices yet, Symantec executives believe it's only a matter of time before virus writers start targeting them.

"As you watch the Internet grow and see a move toward wireless devices, you will also see the bad guys move toward these devices," said Vincent Weafer, director of the Symantec Antivirus Research Center.

The cell phone virus, called "Timofonica," caused infected computers to dial all cell phone numbers in a computer's address book and deliver a text message disparaging Spanish telephone company Telefonica.

Earlier this year, Microsoft's WebTV, which uses TV set-top boxes for Internet and email access, was hit by a self-replicating bug that wreaked havoc with the network's message boards and discussion groups.

Security experts tagged both bugs as more annoyances than significant threats, but they pointed to the spreading vulnerability of data as more devices connect to the Internet. Computer Associates, for example, has already released antivirus software for Windows CE devices and is working to protect Palm devices and mobile phones.

Today's announcement is Symantec's latest attempt to profit from the perils of Internet security.

Symantec and other antivirus software makers did brisk business during the recent spate of virus outbreaks, including the destructive "I Love You" virus that swept through computer email systems worldwide.

But even before then, Symantec was in the midst of a renaissance.

CEO revives company
After years of uneven financial results, analysts say Symantec has found solid footing with the arrival of chief executive John W. Thompson and his new focus on Internet security.

His goal is to parlay Symantec's strong presence in the consumer antivirus software market into a big piece of the lucrative corporate security market, where the company competes against Network Associates, Trend Micro, ISS Group and others.

With the Internet security market exploding and more companies realizing that security has to become a priority, Thompson is optimistic that Symantec will win a good share of the market.

"We want to become analogous to the Internet, just as Cisco (Systems) is," said Thompson, a former IBM executive. "Cisco makes a point of having every bit of data travel through a Cisco router. We want to make the same claim--that every bit of information that travels through the Internet is secured by Symantec technology."

During Thompson's first year at Symantec's helm, the company's quarterly revenues have grown between 22 and 40 percent, and its stock has risen fivefold, from $13 to a high of $80 before falling to its current level of about $69. And analysts expect revenue growth and profits to continue.

"The company historically has had solid products but poor execution," said Prudential Securities analyst John McPeake, recalling layoffs and several quarters of missed earnings in the late 1990s. "Thompson has refocused the company significantly, and it's doing exceptionally well."

Eyes on the corporate market
Since Thompson's arrival, Symantec has sold two unrelated businesses--its software development tools and sales contact management software--and has acquired two firms to beef up its corporate Internet security offerings.

Besides antivirus software, Symantec is focusing on two emerging markets: overall corporate security and Internet and email content filtering.

Symantec recently purchased security consulting firm L-3 Network Security, which makes software that can assess the security vulnerability of business computer networks. It also recently acquired URLabs, maker of software that can scan email and Internet content and block unwanted information, such as spam email and pornographic Web sites.

"The two segments of the security software market are projected to be $5 billion by 2003, and we'll get our fair share," Thompson said.

The ratio of Symantec's overall revenue for antivirus and security software is 58 percent consumer to 42 percent corporate. Thompson hopes corporate sales will eventually reach 70 percent of overall revenue, but that doesn't mean the company is ignoring the consumer market.

In addition to today's Palm announcement, the company recently began selling personal firewall software that protects consumers with cable or digital subscriber line (DSL) Internet access from hackers.

"With more users using broadband connections, it allows a plethora of data sources to come into the home," Thompson said. "Our focus is how we protect that environment."

Symantec is also making its antivirus and security software available online and recently struck a deal that will scan the email that people send and receive from Yahoo's free email service.

Analysts say Symantec has a sound business strategy, and they expect the company to have 20 to 23 percent quarterly revenue growth throughout fiscal 2001. In April, Symantec reported fourth-quarter income of $40.2 million, or 49 cents per share, on revenues of $187.2 million. The company beat Wall Street analysts' predications by 4 cents, according to First Call/Thomson Financial.

Prudential's McPeake rates Symantec a "strong buy," with a 12-month target price of $100.

"Symantec's stock price had been languishing for a while because their constant focus was on the consumer retail market. It's not a market investors get excited about," said Standard & Poor's Equity Group analyst Brian Goodstadt. "Thompson has moved the company toward more growth. The corporate market is faster-growing and more profitable."