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Fortinet Inc (FTNT), Sourcefire, Inc. (FIRE): Protecting Ourselves From China’s Hackers

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China’s government-backed hackers are reportedly back at it again after a brief period of keeping a low profile. Clearly, the cyber war is only just getting started. Three companies that look set for years of growth by protecting us from hackers are Radware Ltd. (NASDAQ:RDWR), Sourcefire, Inc. (NASDAQ:FIRE), and Fortinet Inc (NASDAQ:FTNT)

Fortinet Inc (NASDAQ:FTNT)

A Renewed Effort

“Three months after hackers working for a cyberunit of China’s People’s Liberation Army went silent amid evidence that they had stolen data from scores of American companies and government agencies, they appear to have resumed their attacks…” That’s from the first sentence of a recent New York Times article.

While few thought the war ended when the U.S. government openly pointed a finger at China, three months seems a short time to wait before going back at it. It suggests either an emboldened China pushing political boundaries or that hacking is so vital to the country’s current efforts that public image doesn’t matter. Either way, U.S. companies and governments, at all levels, need to be prepared.

This is Big

While hacking may seem obscure, it isn’t. The Times reports that China’s hackers “were behind scores of thefts of intellectual property and government documents over the past five years,” including such things as “blueprints, manufacturing plans, clinical trial results, pricing documents, negotiation strategies and other proprietary information…” To put that in perspective, imagine a hacker figuring out how to cripple the U.S. electric grid.

Here are three companies that help corporations and governments protect themselves:

Denial of Service Expert

All attacks aren’t of the backdoor variety. Some hit computers with so many requests for information that a system fails. This is known as a denial of service attack. While that can be just an inconvenience to users, it can be incredibly costly for a company. Radware Ltd. (NASDAQ:RDWR) is a leader in defending against such attacks.

The company has two business lines, Application Delivery and Network Security. The former is focused on making networks work better. The Network Security division provides “attack mitigation systems.” These are physical devices that monitor network and/or system activities looking for malicious or unwanted behavior. The devices react to such threats “in real-time” to stop an attack.

Radware’s top line has grown steadily over the last decade, though the first quarter’s results were flat year over year and down about 10% sequentially from the fourth quarter. The market didn’t respond kindly to that shortfall and the stock has traded notably lower. Still, the company’s often volatile earnings have remained in the black for the past three years, including in the relatively weak first quarter.

The sell off could be a buying opportunity.


Sourcefire, Inc. (NASDAQ:FIRE) also makes devices that monitor networks for security threats. In 2012, the company introduced a number of new technologies. Some of the more interesting launches were products that detect malware in networks and in the mobile world.

Malware is software that gets into a network and does, as the name suggests, something bad. That can be deleting files, bringing a network down, or providing an opening for a hacker looking to hijack a computer system. Hijacked computers can be used to attack other computers or can be rooted through for valuable information.

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