Radware Ltd. (RDWR), Sourcefire, Inc. (FIRE), Fortinet Inc (FTNT): The Cyber War Expands

The Untied States is looking to help allies fend off cyber attacks. That’s a good thing for this country and a good thing for companies in the cyber defense space.

Not just a U.S. Issue

While attacks against domestic computers make the biggest headlines in this country, it’s important to remember that the cyber war is a global issue. That fact isn’t lost on the U.S. government, which, according to The New York Times, is looking to help allies in the Middle East and Asia bolster their cyber defenses.

The impetus behind this push seems to be a pair of attacks by rogue nations. Iran managed to cripple 30,000 computers at Saudi Arabia’s largest, state-controlled oil company. That attack didn’t cause much damage, but was a serious wake-up call. North Korea, meanwhile, recently managed to shutter some South Korean banks for a few days with an attack.

Some Names to Look at

The support being offered to allies is likely to be training based. Thus, implementing best practices using off-the-shelf technology is going to be the big push. That means companies like Radware Ltd. (NASDAQ:RDWR), Sourcefire, Inc. (NASDAQ:FIRE), andFortinet Inc (NASDAQ:FTNT) could benefit from increased foreign demand.

A Simple, but Damaging Attack

Radware Ltd. (NASDAQ:RDWR) is an expert in denial of service attacks. In such an attack, a computer system is flooded with information requests to the point where it pretty much has no choice but to shut down. That may sound like little more than an inconvenience to users, but it can be incredibly costly for a company or country. Imagine such an attack taking place against a government agency.

The company’s Network Security division sells physical devices that monitor network activity looking for malicious or unwanted behavior. The devices react to such threats “in real-time” to stop the attack.

The company’s sales have grown steadily over the last ten years. That said, first quarter results were flat year over year and, more concerning, down about 10% sequentially from the fourth quarter. The stock traded notably lower on the news.

The growing threat of cyber attacks and the U.S. effort to spread the gospel on stopping such attacks before they start should support continued long-term sales growth. And, despite the weak quarter, the company’s bottom line remained in the black, showcasing the strength of the business. The sell off could be a good buying opportunity.