Secure Your Portfolio Growth with These Tech Companies
Madhukar is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As per Gartner, it is expected that the global market for security technology and services will surge from $61.8 billion last year to $67.2 billion this year. This market can potentially reach $86 billion by 2016 due to the rising demand from emerging markets and increasing threats from hackers. Moreover, the demand for security protection will rise due to the increasing number of web applications, social media, and video streaming websites.
Two security and protection solution providers are capitalizing on the growing security and technology market through new acquisitions and upgrading products. Are there any investment opportunities in these companies?
Cisco's (NASDAQ: CSCO) network security solutions division provides solutions like firewalls, data solutions, and virtual private networks. The company generated revenue of around $5.4 billion in the last year from its network security segment, but its revenue decreased 4% in the third quarter of 2013 year-over-year. To resist further declines, Cisco announced the acquisition of Sourcefire (NASDAQ: FIRE) for around $2.7 billion.
The deal is expected to complete this year and will strengthen Cisco’s security solution business. Sourcefire has automated security and protection products including next-generation intrusion prevention systems, advanced malware protection, and firewalls. Moreover, it generated revenue of $56.2 million in the first quarter of 2013, up 21% year-over-year. Cisco was falling behind its smaller competitors in providing security solutions, but this acquisition will limit this competition. It is expected that Cisco’s revenue will increase significantly from $5.45 billion last year to $6.65 billion next year by providing security solutions to customers.
Cisco generated revenue of around $8.31 billion from its router business in the last year by providing enterprise routers and service provider routers to clients. The company will upgrade its CRS router to the CRS-X router model this year. Moreover, around 750 telecommunication service providers are using CRS routers currently, and these companies are facing challenges like limited scale, separate internet, protocol networks, and architectural constraints.
The upgraded CRS-X router routers will have 400 gigabyte per second (Gbps) slot density, which will facilitate the telecommunication companies’ architecture. Moreover, these routers will have Cisco CPAK photonic technology which will reduce power consumption, reduce cost of sparing, and increase deployment flexibility. With the help of this upgrade, Cisco’s router business revenue is expected to reach $8.89 billion in the next year. Moreover, it is expected that the company's revenue will surpass $10 billion by 2017.
Flat to higher revenue
Symantec Corporation (NASDAQ: SYMC) provides antivirus and Internet security through its Norton software; this segment contributes around 30% of the company's overall revenue. This software provides antivirus protection, Internet security, malicious application protection, and phishing protection.
Symantec dominates the consumer antivirus and security market with a market share of 46.1% last year. It is expected that Symantec’s market share will decrease to 45.1% this year due to a slowdown in PC sales, however.
Symantec generated revenue of $1.43 billion last year by providing security software and solutions to corporations. These solutions help corporations detect spam emails, virus, spy applications, and provides backup and recovery options for their systems. The software can also integrate with Outlook, Lotus Notes, and SharePoint, programs that companies commonly use for professional emailing.
The demand for security software and devices has increased due to the trend of "bring your own device" (BYOD) policies at workplaces, which has led corporations to take major steps towards securing data and networks. The software helps administrators take control of various applications and data from a centralized location. It is expected that Symantec's revenue from this business segment will rise to $1.47 million this year.
Symantec’s revenue from Norton is expected to remain flat in this year, but its security system business will grow due to cost effectiveness and unique features. Cisco’s new CRS-X router will help the company increase the revenue as well; its features are matchless among other router manufacturers. The company's acquisition of Sourcefire will increase its product portfolio, and it will able to leverage the benefits. I recommend a “buy” for all off these companies.
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Madhukar Dubey has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems and Sourcefire. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!