Forwarded from: "Boivin, Patrice J" <BoivinPat_private-mpo.gc.ca> http://www.boston.com/dailyglobe2/154/business/Waiting_for_the_security_payout+.shtml By Ross Kerber Globe Staff 6/3/2002 Cyber terrorism jitters were supposed to boost the fortunes of information technology companies specializing in security. But thus far, even as the fears and attention to network breaches escalate, the promise of increased business has largely failed to materialize. Companies such as RSA Security Inc. of Bedford and California-based VeriSign have reported losses and layoffs lately. Competitors like Netegrity of Waltham and New York's Predictive Systems, which has a Waltham operation, haven't fared much better. Most blame weak technology spending within the private sector and say increased government spending on technology has yet to offset the drop-off in business from corporations. Even the FBI's high-profile restructuring of its priorities last week, in which it announced it would put a new emphasis on thwarting cyber terror and building its information technology base, didn't include new spending requests. The omission means the FBI will likely ''focus on finding more efficiencies in their use of resources,'' said William Whyte, director of research at Ntru Cryptosystems Inc. in Burlington, a closely held maker of security software for smart-card systems like those used for subway fares. The light demand for security products seems counterintuitive. Major industries including banking, transportation, and energy services have all established trade groups to improve their defenses against cyber attacks, cooperating with the White House Office of Homeland Security. Partly as a result, International Data Corp. in Framingham predicts the market for Internet security software will grow from $6 billion in 2001 to $14.6 billion by 2006. At the same time, the government itself has increased information technology outlays, with a heavy emphasis on security. For fiscal year 2003, the Bush administration requested $52 billion in federal information-technology spending, a $4 billion increase over 2002. But these steps thus far have not led to specific purchases, said John Worrall, the RSA vice president for marketing. ''Congress has allocated a ton of money for security, but that doesn't mean the security industry is going to see a benefit from that immediately,'' he said. ''If there's a significant increase in spending after 9/11, no one's seeing it,'' Worrall said. For the three months ended March 31, RSA revenue was $55.5 million, down from $76.3 million a year earlier. It posted a quarterly loss of $13.7 million, compared with net income of $9.8 million for the same period in 2001. RSA's most upbeat announcement lately is that its products are featured in the new movie thriller ''The Sum of All Fears.'' The movie portrays CIA agents logging into a computer network using passcodes created by RSA's random-number generating devices. Ironically, the company's financial results suggest the devices haven't generated as much excitement in real life. In Waltham, Netegrity reported a weakened first-quarter performance, with revenue falling to $22 million from $26.3 million a year ago. The company lost $2.7 million, partly due to the costs of an acquisition, compared with net income of $3.3 million a year earlier. Netegrity said it's optimistic that federal sales eventually will pick up the slack left by private-sector demand and notes it has made oversight of federal sales into a full-time job for an executive, Pete Morrison. ''I can't respond fast enough to the federal opportunities that are there,'' he said. For instance, Morrison said Netegrity is in talks with the FBI about selling the bureau new management tools such as the company's SiteMinder software, which can control who has access to a given database. The agency is interested in the product as its agents' roles expand under new laws like the Patriot Act, he said. A few bright spots have come in smaller markets where start-ups have found niches. Ntru, which has about 30 employees, raised $26 million in a second round of venture-capital last year, enough to keep running at least through 2004. Meanwhile, in Waltham, Maria Cirino, chief executive of closely held Guardent Corp., says the company expects to double its revenue to $30 million this year selling network security services. At its own data center in Rhode Island, Guardent remotely monitors and stops intrusions into the computer networks of nearly 1,000 customers. ''Everybody wants better security, but they're realizing they can't get it just by buying more firewalls'' and other products from larger companies, she said. ''They need more specialist firms'' that can operate security software and thwart intrusions. Ross Kerber can be reached at kerberat_private - ISN is currently hosted by Attrition.org To unsubscribe email majordomoat_private with 'unsubscribe isn' in the BODY of the mail.
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