Somewhat OT:
NEW YORK (Dow Jones)--Demand for products that protect computers and networks from viruses and hackers is gaining traction, thanks to highly publicized recent attacks and a strict regulatory climate.
More than one Wall Street firm gave the technology security sector a boost Tuesday, less than a week after federal authoritiess charged a Minnesota teenager with helping to spread the Blaster worm, a computer virus-like infection, across the Internet.
Stocks of companies that protect virtual private networks and which make firewalls registered some of the best gains, and some hit 52-week highs bolstered by sell-side comments and a high-profile technology conference that begins Wednesday.
"We believe that the increased number and complexity of security attacks, combined with a stricter regulatory environment" will continue to keep security spending in the top quartile for the foreseeable future, Goldman Sachs analyst Sarah Friar said in a research note.
Pacific Growth Equities gave NetScreen Technologies Inc. (NSCN) and its rivals a boost, saying it believes "that IT spending is showing a modest recovery but the spending is highly focused on critical technologies, one of which is security/VPN."
Pacific Growth analyst Erik Suppiger raised his profit projection for Netscreen to reflect what he said is "robust" product demand, based on channel checks.
Another player in the VPN space, SafeNet Inc. (SFNT), got a lift on speculation ahead of its appearance Wednesday at Credit Suisse First Boston's annual Global Software Conference in New York City. The event goes from Wednesday to Thursday.
Shares of SafeNet hit a new 52-week high of $38.74 earlier, a gain of 8%. The previous high of $36.82 was set July 15. More recently, SafeNet changed hands at $37.94, up 5.7% on volume of 416,200. Average daily volume is 353,099.
NetScreen rose as much as 7.1% earlier, but more recently fetched $24.80, up 3.5%, on 2.6 million shares compared with average daily turnover of 1.9 million.
Sonicwall Inc. (SNWL) shares hit a new 52-week high of $6.85 earlier, for an intraday gain of 8.7%. That was above the previous high set Aug. 27 of $6.68.
Other network technology security providers up Tuesday included Internet Security Systems Inc. (ISSX), which recently changed hands at $12.95, up 4%, on volume of 1.6 million shares compared with average daily volume of 1.1 million.
SafeNet's investor relations spokeswoman Michelle Layne pointed to the company's presentation at the CSFB conference as the reason for the increase in share price.
Layne said the company will only be providing an overview and discussing financials at Wednesday's presentation, adding that she doesn't expect the company to release any new information.
Goldman Sachs' Friar said the Sarbanes/Oxley Act and Health Insurance
Portability and Accountability Act as examples of legislation that will
require more technology security spending. Individually, she said she expects the latest worm attacks to benefit companies like Network Associates Inc. (NET), as well as NetScreen and Check Point Software Technologies Ltd. (CHKP). Her top pick is Symantec Corp. (SYMC).
But her research note contained a note of caution regarding the VPN/firewall space.
"Our checks suggest that the firewall/VPN market remains strong in North America, but feedback from Europe through August continued to be lackluster," Friar said. "Competition in this area also continued to heat up, with some suggestion from the channel that Check Point has become more aggressive on pricing...."
AI
