Tag Archives: request

Justice Department Encryption Headaches Will Extend Beyond Apple

Facebook ( FB ), Alphabet ( GOOGL ) and Snapchat are bolstering their encryption technology to increase user privacy, as Apple ( AAPL ) fights the U.S. government over iPhone encryption. A report from the Guardian says Facebook’s instant messaging service, WhatsApp, plans to expand its secure messaging service so that voice calls are also encrypted. WhatsApp has 1 billion monthly users. Facebook is also considering beefing up security of its own Messenger tool, the Guardian report said. Messenger has about 800 million users. The report also said Alphabet is exploring extra uses for encryption technology currently under development for its Google email services, and that Snapchat is developing encryption services for its messaging platform as well. These projects were underway before Apple’s fight with the U.S. Department of Justice over iPhone encryption. That fight began on Feb. 16 when a federal judge in Southern California ordered Apple to provide “reasonable technical assistance” to the FBI to help unlock a password-protected iPhone belonging to Syed Farook, one of the killers in the San Bernardino, Calif., terrorist attack on Dec. 2. This battle — seen as a crucial test of privacy vs. security — is headed to federal court in Riverside, Calif., as it’s being debated aggressively in the court of public opinion. Revelations that Facebook, Alphabet and Snapchat are also planning to bolster their security could further antagonize authorities. Alphabet, Facebook, Snapchat, Amazon.com ( AMZN ) and Microsoft ( MSFT ) have all signed on to legal briefs supporting Apple in the iPhone encryption fight. While the Justice Department wages war with Apple, government officials are also debating how to resolve a prolonged standoff with WhatsApp, according to a New York Times report . The report said the Justice Department is discussing how to proceed in an investigation in which a federal judge had approved a wiretap, but investigators were stymied by WhatsApp’s encryption. In a separate but related matter, on March 1 federal police in Brazil arrested a Facebook executive after the company failed to turn over information from a WhatsApp messaging account that a judge had requested for a drug trafficking investigation.

CyberArk Software Stock Upgraded Amid Lingering Acquisition Chatter

Analysts backpedaled Monday from a collective theory in February that cybersecurity spending would slump in 2016, while  CyberArk Software ( CYBR ) garnered an upgrade on continued acquisition chatter. IBD’s 25-company Computer Software-Security industry group toppled 7.4% and 7.2% in back-to-back sessions last month after Tableau Software ( DATA ) and LinkedIn ( LNKD ) issued gloomy guidance. Since then, however, the group has rebounded 28%. “Based on conversations post-RSA, our security spending concerns have diminished,” Summit Research analyst Srini Nandury wrote in a research report Monday, referring to the annual RSA cybersecurity conference this month in San Francisco, which more than 40,000 people attended. CyberArk’s bread and butter — privileged account security — remains a top spending priority in 2016, Nandury wrote. He upgraded CyberArk stock to a buy and boosted his price target to 50 from 30. Nandury noted his upgrade is supported “with persistent chatter of CyberArk as a potential acquisition candidate, while limiting downside from current levels.” Last month, rumors arose that fellow Israeli firm Check Point Software Technology ( CHKP ) might be eyeing CyberArk. In afternoon trading on the stock market today , CyberArk stock was flat, near 38.50. The IBD security software group was also flat, hurt by a 16% plunge for  NQ Mobile ( NQ ) stock. NQ announced Monday that a subsidiary of China’s Tsinghua Holdings would not be able to proceed with a planned acquisition of NQ subsidiary FL Mobile. Spending Seen Moving To CyberArk Specialty Enterprises are shifting some spending from endpoints to privileged account spending, where CyberArk leads, Nandury wrote. Surveys show cybersecurity spending at the forefront of chief information officers’ minds driven by “state-sponsored breaches and hacker collectives.” “Chief information officers understand that once hackers penetrate the perimeter, they look to hack privileged accounts (super-user and administrative accounts) to get to the data,” he wrote. “Securing privileged accounts then takes on great importance.” Nandury sees CyberArk hitting its 30% sales growth target as it aggressively expands headcount. Sales and marketing spending is expected to remain in the 35%-40% range, he says. But days before Nandury’s upgrade, William Blair analyst Jonathan Ho cut his 2017 estimates on CyberArk to take a conservative investment viewpoint. However, Ho still rates CyberArk stock at outperform. For 2017, Ho sees $1.12 earnings per share ex items vs. earlier views for $1.37. He cut pro forma operating margin to 21.2% from 26.3%, and projects 27.3% billings growth vs. earlier expectations for 33.6% growth. CyberArk’s December-quarter results were impressive, considering their difficult comparison, Ho wrote in his report. He expects CyberArk to continue market share gains against CA Technologies ( CA ) and Dell. Like Nandury, he noted that CyberArk says it hasn’t seen a drop-off in demand. A January CIO survey by Piper Jaffray shows internal access management, which includes CyberArk’s crown-jewel-protecting core, as the fifth-most-important spending target for 2016. Endpoint, compliance and Web-access firewall led the survey in terms of spending priorities.

Microsoft SONiC Souring Arista’s ‘Secret Sauce,’ Sending Stock Down

Arista Networks’ stock plummeted Monday after Jefferies lowered its price target, questioning the outlook for future sales to its No. 1 customer, Microsoft. Analyst George Notter, writing in a research report, reiterated Jefferies’ underperform rating on Arista ( ANET ) and sharply lowered his price target to 40.25 from 52.50. He said Microsoft’s SONiC “announcements are troubling for Arista,” referring to that company’s software for open networking in the cloud. Arista stock was down more than 10%, near 56.50, in early afternoon trading in the stock market today , 35% off of a 16-month high hit in June. Arista shares — which went public in June 2014 at 43 — touched an all-time low of 52.59 on Feb. 9 of this year. Switching rival Juniper Networks ( JNPR ) was down 1.5% Monday afternoon, and and bigger competitor  Cisco Systems ( CSCO ) was off a fraction, as Notter said they have less exposure than Arista to an anticipated decline in switching revenue with Internet content provider customers, though they too are exposed. In his research note Monday, Notter said last Wednesday’s Linux-based Open Compute Project (OCP) Summit in San Jose, Calif., made Jefferies “much more concerned about Arista’s business at major customers such as Microsoft ( MSFT ), Facebook ( FB ) and Apple ( AAPL ).” That’s because Microsoft had just demonstrated SONiC, free software-defined networking (SDN) that makes high-speed switches unneeded. Cisco, Juniper and Arista all make such switches, but “in Arista’s case, the Web scale operators account for roughly 25% (or about $200 million) of the company’s revenue stream — all in switching,” said Notter. He cited Cisco as saying “several quarters ago” that about 5% of its overall switching business, or “roughly” $700 million annually, comes from Internet content providers. For Juniper, it’s about 20% (or $970 million) of total sales, Notter noted. “For us, the big ‘wow’ moment at the (OCP) show was our trip through Microsoft’s SONiC-themed booth,” Notter wrote. “We saw the operator demonstrating SONiC running on switch hardware from Arista, Juniper, Centec, Mellanox ( MLNX ) and Dell — with different ASICs  (application-specific integrated circuits )  including Broadcom ( AVGO ), Barefoot Networks and Mellanox. The development of SONiC/ACS (Azure Cloud Switch) and SAI (switch abstraction interface) software now allows buyers to mix and match these components. “More pointedly, Arista is allowing Microsoft to use a hardware-only solution (i.e. without EOS, Arista’s extensible operating system). Based on all the activity at Microsoft, it’s our view that — over time — all (or nearly all) of their switch deployments will migrate to white box hardware + SONiC.” He said Microsoft accounted for 12% of Arista’s 2015 sales of $838 million. Wait, it gets worse: “Microsoft noted that they are now running SONiC in their production environment (although we presume the extent of the deployment is still small). We understand that Microsoft plans to expand the software platform quite rapidly across all of their data centers,” Jefferies’ Notter said. What’s bad for Arista may be good for Mellanox, however. “Separately, a number of industry contacts are saying that Microsoft is very interested in using Mellanox’s Spectrum switching ASIC,” Notter said. Mellanox stock was up a fraction Monday afternoon. Jefferies maintains hold ratings on Juniper and Mellanox and an underperform on Microsoft, but it rates Facebook stock a buy. Image provided by Shutterstock .