AVG Technologies' stock fell 11 percent on Friday with the resignation of AVG Technologies CEO JR Smith. This was the antivirus and internet security vendor’s biggest one-day drop since they went public with their IPO just over a year ago. AVG was downgraded on 3/12 by Morgan Stanley and the stock dropped another 10.3%. http://finance.yahoo.com/news/avg-technologies-falls-analyst-downgrade-191512922.html
“JR has been a
visionary leader for AVG. He transformed
the company from a small European antivirus company to a successful publicly
traded global leader in PC and mobile solutions,” said Dale Fuller, chairman of
the supervisory board of AVG. Smith will remain as CEO until a replacement is
named. Chief operating officer John
Giamatteo runs day-to-day activities. http://online.wsj.com/article/BT-CO-20130307-715759.html
“During my six years as CEO I am proud of what we’ve
accomplished: substantially growing the customer base, delivering strong
financial performance, successfully leading our IPO and building a world class
business and management team,” said Smith in a statement. http://www.fool.com/investing/general/2013/03/07/avg-ceo-resigns.aspx
Revenue for the fourth quarter of 2012 was $95.2 million, compared with $74.3 million in the fourth quarter of 2011,
an increase of 28%. For the fiscal year
2012, revenue was $356.0 million, compared with $272.4 million in 2011, an
increase of 31%. User numbers were 146
million at December 31, 2012, an increase of 38 million, or 35%, compared with
the prior year. The company is becoming
increasingly more dependent on platform revenue (Google and Yahoo). http://www.darkreading.com/vulnerability-management/167901026/security/news/240150252/avg-technologies-announces-change-to-executive-leadership-team Few of the reports on latest revenues have
pointed out that net income dropped by about 1/2 in fiscal 2012.
AVG Technologies during the JR Smith Years
Market Share - The installed base first went up, then market
share decreased (on the laptop/PC side) as measured by OPSWAT (hello free
Microsoft AV). At one point during Smith’s
tenure, they claimed the fourth largest installed base. Installed base is up again because of
tablet/smartphone installations (in part through deals with Huawei in India,
and Samsung in the UK). Downloads on
CNET were close to 2 million weekly for a while. Currently, Avast is ahead of them, with Avira
trailing. Microsoft is ahead of all
three.
Product Line(s) – The number of products increased during
Smith’s tenure to include parental
protection (acquisition), cloud storage (acquisition), mobile security
(acquisition, initially), PC Tune-up, and AVG Cloud care. It’s increasingly more difficult to be
innovative in consumer internet security as many firms were offering multiple
products each with their own permutations of similar functionality, not all
related to security. Buying versus
making is a valid business decision. AVG
Technology was late to the game in adding additional functionality to their
suites. They were late in getting
involved in the mobile market.
Toolbars? Mixed
reaction by the consumer marketplace, particularly when the “yes” option is
clicked for you. The internet is filled with instructions on how to uninstall
various firms’ toolbars. Google appears
to be encouraging firms to move away from the default being opt-in. More revenue through secure search? Maybe........
Product quality – Not the CEO’s responsibility. The paid products tended to be middle of the
road among those tested. Sixteen out of twenty
in a September 2012 AV-Comparatives test.
Fourteen out of Twenty-one in a late 2012 AV-Comparatives Whole Product
Dynamic Real-World Protection Test. 10
pass and 2 fail in the las 12 Virus Bulletin VB100 tests they participated in. The free product has been a PC Magazine
favorite.
Marketing - mixed.
“We protect us.” Bad. We needs instruction in grammar! “How many toothpicks to stop a tiger?” Interesting.
An unlimited cloud storage product with a limit when you read the fine
print? Come on, marketing people. Switch
to us for free. Been there.
Done that. Amoeba like Facebook
friend creatures? Frightening.
Product Churn – The bane of every free product. When you have zero switching costs, it’s easy
to switch to the next product. Autorenewal? Symantec and McAfee got their
wrists slapped $$$ for making it hard to cancel. Other vendors were better about it.
AVG has obtained the usual product certifications with
West Coast Labs and ICSA. AVG won SC Magazine and Info Security Product Guide
Global Excellence awards in 2010. Quiet
since then.
US presence - US headquarters has been a game of musical
chairs. Florida. Then Boston.
Now San Francisco. San Francisco
doesn’t count as Silicon Valley. However,
the employees are much closer to SF Giants games. You see the AVG’s products in big box office
supply stores like Staples and Office depot.
The number of facings is only a fraction of those of Symantec and
McAfee. Consumer AV is very much an
online purchase, unless you’re going for the free paid versions (after
rebates), that always appear when people start purchasing tax software.
The IPO (Initial Public Offering) – This wasn’t a stellar
IPO for AVG when they went public in February 2012. The target range was around 16 to 18. The stock closed around $13 on its first
day. Blame the smartest people in the
room for less than stellar number crunching.
The current stock price as of March 11, $13.75. The stock has been as low as in the 9’s and
has broken 16. Praha based competitor
Avast filed for an IPO and then cancelled.
Kaspersky has decided not to go public for the time being. It did take the longest time after the rumor
mills started about the IPO. The date,
whether it was going to be on NASDAQ, NYSE, London Exchange, or others. Stock price as of March 11 - $13.62.
Like many firms, the company has benefited from having a
presence in the Netherlands (dual headquarters with the Czech Republic (better
beer) and Ireland (that tax reduction thing) http://kensek.blogspot.com/2012/04/double-irish-with-dutch-sandwich-yummy.html
But then, larger firms just park money overseas. By sheltering their assets overseas, Silicon
Valley companies such as Apple, Google, eBay, and Hewlett-Packard are able to
reduce their annual taxes in some cases by billions of dollars, according to a
Center for Investigative Reporting analysis of the 50 largest firms’ financial
statements filed in 2012. http://blogs.kqed.org/newsfix/2013/02/13/cisco-apple-hp-oracle-google-avoid-paying-billions-in-taxes/
In the end, an AVG (A Very Good) run for Smith. After all, during his tenure, how many CEO’s
did HP have? How many did Symantec have? No stories about “escorts” showing up at
parties in Las Vegas. No children being
pulled on stage to sing at company all hands meetings.
Czech funk-soul band Monkey Business may
now have to find other corporate gigs.
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