Wednesday, May 30, 2012

Avast Gradually Moving Forward With IPO

July 12 - See an update at 

Avast is gradually taking the steps to undergo an IPO (Initial Public Offering) on the NASDAQ exchange as AVST.  They filed a second amendment to their F-1 with the Security Exchange Commission on May 7.  The amended F-1, 150 plus pages of reading, including 23 pages of risk factors.  Three years of financial statements are included.  2011 revenue was $82.1 million, a nice 69% increase over 2010’s $48.4 million in revenue.   Avast promotes that they have around 160 million users of their products.  According to the OPSWAT 2012 March “Security Industry Market Share Analysis”, Avast has the top spot, with 16.3% of the market.

Avast has also now opened a hiring req for a SEC Reporting Manager, operating  out of their San Francisco Bay Area office.  This means Avast has  to be getting serious about the IPO ;).  “The individual in this critical, hands-on position will be based in the San Francisco Bay Area, report to the CFO and have responsibility for compliance with SEC reporting requirements, including preparation of Forms 20-F and 6-K, and Sarbanes-Oxley”.

This person will be traveling to Prague occasionally.  When the financial people from Prague travel to the Bay Area, they will be able to find Czech food  though there are some rather nice restaurants in the Bay Area!  Foodies are usually happy when they visit.

 No new rumors as to when the IPO will take place. No sightings of executives in hoodies on Sand Hill Road in Menlo Park, or having breakfast at Burk's in Woodside.  Rumors of sightings at mid Peninsula Starbucks.  The date (IMHO) will shift after  Avast people and their external “smartest guys in the room” make any adjustments based on   analysis of the Facebook IPO. "Pops" are nice on the first day of an offering and neither Facebook nor their Prague based competitor AVG Technologies, had these  on their first days. 

Gartner Magic Quadrant for Secure Web Gateways - May 2012

Gartner released its Magic Quadrant for Secure Web Gateways on May 24    ID:G00234572.  You can’t say that there was a clear winner among the companies in the Leaders Quadrant.  Zscaler remained the highest ranked with respect to Completeness of Vision, and Cisco from the perspective of Ability to Execute.  Websense and Blue Coat were sandwiched in between with McAfee also in the Leaders Quadrant.  

Among the usual suspects, Webroot was dropped from the grid (must meet those revenue thresholds, people) and M86 Security is now part of Trustwave.  Barracuda is now in a more favorable position than Trend  Micro in the Challengers part of the quadrant.  Overall, though, there  wasn’t a lot of movement between the companies represented on the Quadrant.  

Companies evaluating alternatives  should look at the report for the Strengths and Cautions highlighted by Gartner.  It’s also interesting  to look at the previous year’s report,   to see whether vendors you’re evaluating dealt with any of the Cautions Gartner brought up for vendors you may have  under evaluation. 

According to Gartner, The market is  led by  on-premises solutions with 87% of the market with SWG as a service representing the remainder.  Gartner  see’s  the SaaS alternative growing at 35% in fiscal 2012.

Next Generation Firewalls (NGFW) from companies such as  SonicWall and Palo Alto Networks were not included in the reports,  as these are primarily firewalls.  People interested in the growing evolution of this technology and SWG’s, should acquire the Gartner Report  "Next-Generation Firewalls and Secure Web Gateways Will Not Converge Before 2015,"  ID Number: G00212272.  Palo Alto Networks   positions  their NGFW solutions  as making the need to acquire a secure web gateway unnecessary. Unrelated side note - There have to be discussions by Palo Alto Networks people and the "smartest guys in the room" about their pending IPO (Initial Public Offering) after the recent Facebook IPO. Predictions - there will be a Harvard Business School case study and the phrases "pop" and "money on the table" will appear in a lot more articles on future IPOs.

How Do You Use A Gartner Magic Quadrant?

The below is from a Research Methodologies piece  on utilizing Magic Quadrants.  Too often,  a pic of the quadrant will make its way onto a slide deck with no explanation. 
Clients use Magic Quadrants as a first step to understanding the technology providers they might consider for a specific investment opportunity.Keep in mind that focusing on the leaders' quadrant isn't always the best course of action.  There are good reasons to consider market challengers.  And a niche player may support your needs better than a market leader.  It all depends on how the provider aligns with your business goals.

Those wanting a full copy of the report can go to Gartner or register with vendors such as Zscaler for read access to the report. Let the issuing of press releases begin. 


Thursday, May 24, 2012

Inside Apple, How the Company Really Works

Fortune Magazine Senior Editor at Large   Adam Lashinksy spoke to students  at Stanford University Wednesday   as part of the DFJ Entrepreneurial Thought Leaders lecture series.  The topic - Inside Apple.  Lashinsky is  the author of   “Inside Apple: How America’s Most Admired – and Secretive – Company Really Works”.   The lecture took place at NVIDIA Auditorium in the Huang Engineering Center, close to   the Packard Electrical Engineering Building and Gates Computer Science Building.

“Apple doesn’t want us to know what goes on inside of Apple,” stated Lashinsky.  At the store on the main Apple campus, individuals can buy a shirt that has on it,   “I visited the Apple campus.  But that’s all I’m allowed to say.”

He felt that Apple’s way of doing business violates “Everything you learned in business school.”  Lashinsky emphasized that businesses should learn from Apple, but not try to copy them.  “Competitors can better understand how to go against Apple by understanding how Apple does it”.

“Today, the company is not led by entrepreneurs.”  Nonetheless, Lashinsky  felt that the company is entrepreneurial and that people under Jobs were challenged (even rudely) to do their best work. 
“Jobs ran Apple as a productive narcissist," Lashinsky said.  He explained that , the company had become a number of fiefdoms by the time Jobs returned   in the 90's. .  They had become a fractionalized company.  Jobs wanted one fiefdom, run by him.  

As examples of  centralizing his fiefdom and focusing  Apple, Jobs slashed the number of products the company offered when he returned to four. Multiple advertising budgets under multiple people were combined into one.  All execs reported to Jobs.    Steve Jobs hated organizational charts,.Something about not making it easy to not poach members of the executive team. Jobs’ right hand person when he returned to Apple was Tim Cook, who is now CEO of the company.  

Apple’s campus, culture, and work are compartmentalized, according to Lashinsky.  Everything is a secret.  If employees aren’t working on a specific project, their card keys won’t give them access to areas dedicated to that project.  Individual’s not working on a product’s UI, for example, may not even know what the UI looks like until the product introduction is held.
Apple managers  micromanage, operating on a milestone basis.  Each action item is assigned to one person, the DRI, for "directly responsible individual".

There aren’t a lot of politics at Apple, Lashinksy stated.  “You don’t have a lot of information to play politics.  So you go to work.”

 “Apple has a culture of fear”, according to Lashinsky.  They have the “ultimate need to know culture.".     Part of the culture is that Apple keeps secrets from itself.  “You don’t talk about what you’re working on.  You charge forward with 100% of your energy” to do great things 

Apple operates on the basis that customers don’t really know what they want/need until it’s provided to them. Then when the product is introduced, the company can “delight its customers with the next new thing.”  He contrasted Apple with companies that do a lot of market research on products.  

As part of its rewards for employees, Apple has an annual Top 100 retreat.    Attendees  are not chosen by rank.  Under Jobs, the meeting room at the retreat was swept for bugs.  Jobs wouldn’t let people take when food servers were in the room.

One Apple's obsessions is their internal focus on integration between marketing,   manufacturing, product management, engineering, and design in a  “Highly  regimented, milestoned way.  Design is paramount at Apple.”

Some other keys to  Apple's  success:

Stay on script.  Determine the message and stay with it.  Keep the press at arm’s length, except important reviewers.  He mentioned the Wall Street Journal’s Walt Mossberg as one of those reviewers.

“Simplify, simplify, simplify”   is on the wall in the marketing building on the main campus,    Lines are drawn through the first two simplifies. 

Sweat the details.  “I would submit that most companies are bad at it.”  If you obsess, it leads to excellence, the company feels.

 Lashinsky felt that Jobs left the company with approximately an 18 month roadmap. It should get interesting after that. 

Seminal Moment for Hewlett Packard and Meg Whitman – 27,000 Layoffs Announced

Let the restructuring begin.  ­ For the fiscal second quarter, ending  in April, Hewlett Packard’s profit before some costs fell to 98 cents a share, below  analysts’ 91-cent average estimate.  However, the sales decline of three percent to $30.7 billion topped   the average projection of $29.9 billion.

As part of the earnings announcement on Wednesday, HP stated that it plans a   27,000 workforce reduction (an 8% reduction) between now and October 2014.  This is the largest payroll purge in its 73-year history.  Annual savings from layoffs, retirements, and other measures, will be about $3.5 billion annually.  The job cuts and retirements will pare Hewlett-Packard’s workforce to  349,600.  Among Whitman’s foci for the coming turnaround, delivering the “right products, at the right price, at the right time.”

Many of the cuts will come from the   enterprise services group, which manages data centers and provides technology consulting. This group expanded when Hewlett Packard acquired Electronic Data Systems for $13.2 billion in 2008.  Services demand has slowed, and the division’s profitability has declined amid competition from companies such as International Business Machines Corp.

  "These are never fun but given where H-P is, these are necessarily to get the company back on track," Sterne Agee analyst Shaw Wu said.  During the reign of Bill Hewlett and Dave Packard, during one economic lull,   employees worked a 4-day workweek with a reduction in pay to maintain staff.  In today’s environment, even they may have had to go for layoffs. 

 “This is quite different from the cost-cutting that Mark Hurd undertook,” Whitman said in an interview.  “This is about fundamental business-process re-engineering.”

Meg Whitman   has said the company needs to make its products and services more competitive and spend more on research and product development.  Under some of her predecessors, Hurd, for example, R&D   suffered as cost cutting was the primary focus.  Brian Marshall, an analyst at ISI Group, said in a research note last month the company ought to spend $4 billion to $5 billion on R&D to compete with IBM and Cisco Systems Inc. in developing new products.  Hewlett Packard had been spending about $3.2 billion annually. 

When Whitman was named CEO in September, HP’s stock was at about $22.80.  It closed on Wednesday at $23.03 and had reached a peak of $29.89 on February 16.  During Whitman’s tenure, NASDAQ has gone up by about 15%.  Not a lot can be read into this, however.

A Brief Timeline of Whitman’s Tenure to Date

  • Aug. 18: HP announces it will discontinue its tablet computer and smartphone products and may sell or spin off its PC division.
  • Sept. 23: HP fires Apotheker after just 11 months and replaces him with Meg Whitman
  • Oct. 27: HP says it will keep the PC division after all. 
  • Dec. 9: HP says that instead of selling its WebOS mobile system or killing it off, it will make it available as open-source software that anyone can use and modify freely.  HP says it still plans to develop and support WebOS
  • Feb. 22, 2012: Whitman urges investors to be patient and talks of a "multiyear journey" for a turnaround. 
  • March 21: HP says it will combine its PC and printers businesses.  The move will save an unspecified amount of money.   
  • April 11: Estimates from research groups Gartner and IDC suggest that HP has regained much of the PC business it had lost during the period of indecision.  Now about those tablets they sold for $99 when they said that they were thinking of discontinuing that business….
There will be uncertainty over the next few months as Whitman and had team decide in more detail where the cuts will be during this restructuring.  About a third of them will be in the United States.  The analysts will probably in general  be positive with the move.  Layoffs and reinvesting in R&D is nothing new.  These are typical turnaround Bain type activities, where both Whitman (and Romney), spent part of their careers.   

Nothing   has been said how acquisitions may play a role in the turnaround. While R&D will increase, growth via acquisition can make sense for certain deals to get into a business or plug a gap in a product line quickly. Part of Apotheker’s demise was his decision to (way) overpay for the Autonomy acquisition.  Hewlett Packard had been investing more heavily in security and making security acquisitions.  This will continue.

When Whitman accepted the CEO position,   she moved out of the “executive offices” and into a cubicle on the floor with other employees.  This is more in keeping with the culture that Bill Hewlett and Dave Packard had for the company. You didn’t see this during the Carly Fiorina era.

Meg Whitman isn’t getting a huge salary for her efforts.    In a recent filing with the Securities and Exchange Commission HP wrote that  Whitman received a salary of $1, about $16.1 million in stock options, and $372,598 in "other compensation," including use of the company aircraft.



Friday, May 18, 2012

A Bit of a Red Face under the Hoodie for Facebook

Facebook has to have a bit of a red face, as well as some of  the investment firms they worked with, as  Facebook closed opening day on NASDAQ  at $38.23.  Meaning no first day pop.  Well, a  0.61% pop.  Part of this may have had to do with the market as a whole, as NASDAQ ended up down 1.24%.  Others wrote that     initial trading glitches at the beginning of the day played a part. Facebook is trading under FB.  No confusion with Bulgaria Air, flight code FB, is expected.

The lackluster opening, the highest the stock went was about $43, means individual investors will be able to buy  Facebook stock at the same price shares were offered to privileged investors, wrote USA Today.  Investors who piled in the first day lost as much as 15% in just a few hours.Facebook ended the day with a $104 billion valuation. And  with $16.1 billion in cash. 

The company  never fell below $38 during the day.It touched $38, a lot in the afternoon.  The price likely would have dipped below $38 if the IPO's financial underwriters hadn't moved to help prop it up, said Sam Hamadeh, CEO of the New York analyst firm PrivCo.

CBS News  commented that while the deal was the second largest in U.S. history, after GM,  the first day of trading was more “whimper than bang”.  566 million shares were traded by the end of the day. 

However, what about that lack of pop?  As written about in a previous blog, there is a whole psychology to first day pops, where “the smartest guys in the room” would like to see a pop for the individual investors.  But not too large a pop, because that would signify leaving money on the table (reduces cash available for investments and purchases of hoodies). The   below contains a link to a Wall Street Journal article about this.

Quiz question.  What Bay Area firm had an 89% opening day pop in March?  Annie’s Inc., the maker of organic and natural foods such as bunny-shaped crackers did this on the NYSE.  They trade as BNNY. 

Now that they’re public, Facebook will have to be a lot more “visible” to the investment community, and file all those quarterly reports on earnings.  The tradeoff firms make in order to get investment capital with an Initial Public Offering (IPO)!

It could get a bit interesting in November.  Facebook granted Restricted Stock Units to employees (RSU's) to allow them to participate in the growth of the company.  The    RSU's are not counted as shares under securities laws.  So Facebook avoided having to file for an IPO when it hit 500 shareholders.  The downside is that  RSU’s don’t qualify for taxation at capital gains rates (around 15%).  Facebook employees will be looking at a combined state and federal tax rate of 45% on their RSUs.  

Meanwhile, a number of Facebook employees may be leaving work a little early on Friday.  There was an all nighter  event at  Menlo Park  Facebook headquarters, prior to the NASDAQ opening bell  rung by CEO Mark Zuckerberg. Friday morning.

Tuesday, May 15, 2012

Whole Product Dynamic Real World Protection Test – April 2012 has released their latest Whole Product Dynamic Real World Protection Test – April 2012.  An informative document that will be updated several times over the course of the year. What’s even more interesting than the results alphabetically by vendor is going online and sorting by performance.  Isn’t that what it’s all about?  The numbers below are "percent captured".

April Results from

    99.8 – BitDefender
    99.4 – G Data
    99.2 – Kaspersky
    99.2 – BullGuard
    98.4 – Qihoo

Same order as March with the numbers changing a bit.  Below are the results from March.  Webroot was in the position of shame with 86.2.  They were the only company capturing less than 90%.   You won’t find this result on their website, I believe.

March Results

    99.8 – BitDefender
    99.8 – G Data
    99.4 – Kaspersky
    99.2 – BullGuard
    98.6 – Qihoo

About -

AV-Comparatives is an Austrian Non-Profit-Organization, which is providing independent Anti-Virus software tests free to the public.   Go to their website to view all the great comparative reports they publish. 

Sophos Offers Partners New Complete Security Suites

Sophos   introduced new Complete Security Suites on Tuesday: Web Protection, Data Protection, and Complete Security.  According to Sophos, these suites offer Sophos partners the solutions   required to help their clients address the "evolving security challenges IT departments are facing due the “consumerization” of IT, the rise of advanced persistent threats, and the increase in malware."

“We recognize that partners are operating in a competitive environment, so they need tools that will help them meet their clients’ demands for stronger security systems,” said John Shaw, vice president product management Sophos.  "With our suites, customers know it’s always Sophos securing them, and they can be confident that they will be backed by both our industry-leading support and our excellent partners.”

Reasons for a Suite
  • Supposedly everything will work together
  • Ease of licensing
  • Simplified management
  • Usually provides substantial cost savings over purchasing functionality separately 
  • One stop shopping 
  • A con – companies will usually not get “best of breed” for some of the components

The Sophos Complete Security Suite  is their Uber Suite, combining: endpoint protection (including Macs), email protection (spam, viruses and to control sensitive date), encryption (full-disk, email, file, and folder), web protection at the gateway and endpoint, and mobile controls (IOS, Android, Blackberry, and Windows mobile devices).  A virtual appliance is included.  

Sophos Data protection Suite - Take out the web and mobile control from the Complete Security Suite.  A virtual appliance is included. 

Sophos Web Protection Suite - Take out email, encryption, and mobile control from the Complete Protection Suite. 

The suites also include support, free security updates, and software upgrades.

To view a comparison of the suites:

Companies evaluating the Web Protection and Data Protection Suites may want to consider licensing the Complete Security Suite, instead.  At the 200-seat level, the premium is just a little over 21% on a 3-year contract.

About Some of  the Other Major Vendors

Sophos also offers a trio of solutions for businesses with less than 50 employees.  Nonetheless, their Complete Security Suite raises the bar versus their competitors. 

But what about home users?  Sophos is more of a business play.  They do offer a free endpoint product for Mac home users - Sophos Anti-Virus for Mac Home Edition.

Sophos is headquartered in Boston, US and Oxford, UK.