New Threats Bring New Opportunities For Websense, Symantec

According to the Websense 2010 Threat Report, the number of malicious websites increased 111.4% over the year in 2010. What’s more, 79.9% websites with malicious code were legitimate sites that had been compromised. As cybercrime continued to grow, 52% of data-stealing attacks were conducted over the Web and 34% of malicious Web/HTTP attacks included data-stealing code. A staggering 89.9% of all unwanted e-mails in circulation during the past year contained links to spam, malicious sites, or both. The United States and China led in cybercrime, remaining the top two countries hosting crimeware and receiving stolen data in 2010. As social networking gained prominence, malicious links on such sites also grew. The report estimates that 40% of all Facebook status updates have links and 10% of those links are either spam or malicious. Online security players are thus having to come up with newer products to keep themselves ahead of cybercrime.

Websense’s Financials
Websense (NASDAQ:WBSN) recorded Q4 revenues of $86.4 million compared with the previous year’s $79.7 million. EPS of $0.32 was also higher than the Street’s projected target of $0.31. During the quarter, the company repurchased 1.2 million shares of their common stock for nearly $25 million.

The company ended the year with revenues of $332.8 million, up from the previous year’s $313.7 million. EPS of $0.43 was significantly ahead of the previous year’s loss of $0.24 per share.

For the current fiscal year, Websense projects revenues of $358 million–$368 million with EPS of $1.50–$1.60. The Street was projecting revenues of $350.2 million with EPS of $1.35.

Websense’s Focus on Social Web
Given the growing cybercrime on the social Web, Websense recently launched new hybrid data protection offerings to secure e-mail and the social Web in the cloud. The new e-mail and Web security products help secure the content by tying in spam protection, antivirus, reputation services, and data loss prevention features. The Websense TRITON Security Gateway Anywhere features data loss prevention to create a unified content security gateway on a single Websense V-Series appliance. The Websense TRITON Enterprise offers a full license for Web, e-mail and data security modules. Finally, the Websense E-mail Security Gateway Anywhere integrates full data loss prevention.

The new offerings are built on their modular TRITON architecture so that partners can scale according to need and will also be able to expand to their soon-to-be released Websense mobile and cloud services.

Their stock is trading at $21.21 with a market capitalization of $877 million. It touched a 52-week high of $25.28 in April of this year.

Symantec’s Financials
Symantec’s (NASDAQ:SYMC) Q3 revenues increased 4% over the year to $1.60 and exceeded the market’s projections of $1.58 billion. EPS of $0.35 was also higher than the Street’s projected $0.33.

For the quarter, the Security and Compliance segment’s revenues grew 13% over the year. Consumer revenues grew 4% and Storage and Server Management revenues grew 1% over the year. Services revenues, however, fell 17% over the year. International revenues contributed 52% of total revenues and increased 6% over the year. The Europe, Middle East, and Africa represented 29% of total revenue for the quarter, and there was 14% growth in revenues from Asia Pacific/Japan.

Symantec projects revenues of $1.59 billion–$1.61 billion with EPS of $0.35–$0.36 for the current quarter. The Street was expecting revenues of $1.58 billion with EPS of $0.35. Symantec also announced their intention to buy back stock worth $1 billion in the coming quarters.

Symantec Focuses on Mobile, Virtualization, and the Cloud
Symantec is focusing on improving their products addressing the trends of mobile, virtualization, and cloud computing. Earlier last year, they released their offering for mobile devices, which includes features such as remote wipe, password policy enforcement, and device inventory. Recently, they launched Norton DNS, a faster and more reliable Web browsing solution that secures without requiring software to be downloaded onto the device. To expand availability, they tied up with retailers such as Best Buy in Canada to offer Norton Mobile Security product to consumers.

Within virtualization, their enterprise solutions are helping customers to secure information and identities in both the virtual and physical environments while saving costs, optimizing license consumption, and employing a hybrid virtual solution. The NetBackup offering, which helps organizations protect, deduplicate, and recover information in both physical and virtual environments, received the Best of VMworld Award in 2010 for its market-leading data protection and virtual machine capabilities.

To address the growing adoption of the cloud, Symantec is creating a portfolio of cloud-based solutions and services that help organizations to lower costs and simplify IT administration while keeping their information and identities secure. Norton Online Backup continued to expand its cloud presence and recorded 13 million users, with stored data growing 35% over the year to 67 petabytes. The company recently expanded their global Web-based Norton Online Family solution to include a paid Premiere version with features such as online video monitoring, 90-day histories, and automatic activity reports.

The stock is trading at $18.44 with a market capitalization of $14.1 billion. It touched a 52-week high of $18.79 earlier last month.