Getting around those nasty opts-ins – the customer be damned

Nice article about opt-in policies and how companies profit from them.  The article “How to get around the New Google "Opt-In" Policy (In Four Simple Pictures”) also details how Perion’s subsidiary SweetPacks creatively got around an "opt-in" requirement.  The result was    individual’s home pages would continue to show additional advertisements profitable to them and to Google.  A great article by Eiad Asbahi on the effects tighter opt-in policies could have on company revenue.   http://seekingalpha.com/article/1147451-avg-feb-1st-google-policy-updates-threaten-avg-s-growth-engine-signals-steep-downside

 

http://seekingalpha.com/article/1281881-how-to-get-around-the-new-google-opt-in-policy-in-four-simple-pictures?source=yahoo

Fie on companies such as Sweetpacks that would do this.   Read those opt-in agreements, people. Now about those companies that still make it difficult to get out of auto renewal agreements….

AVG Technologies - IPO One Year Birthday. Growth Curve or Ski Slope for 2013? Forbes versus Seeking Alpha Contributors

AVG Technologies has now been public for a year.  Their IPO (Initial Public Offering) took place in early February, 2012,  The stock   closed around $13.08 on its opening day last February  on Nasdaq  after targeting an opening day price at $16 plus.   The stock closed  on February 2, 2013  at  $13.14.  These two figures represent a one-year return of 0.38% excluding transaction costs and any dividends paid.  For the first 9 months of their fiscal year, AVG Technologies  revenue was up, but net income was down (not good as a trend).   Over the course of the year, AVG had a low of $9.42 and in December, had a high of $16.38. They have toolbar  deals with both Google and Yahoo.

 A Motley Fool Perspective - February

One worries about the thoroughness of AVG's protection, however, when one sees they've not been very thorough in safeguarding their finances. Current ratio is a quick-and-easy indicator of a stock's health, especially for a smaller company such as AVG which may lack the resources to bail itself out in the long term. With a current ratio of 0.7, AVG is struggling.
But T.M., you might say, AVG could be using its profits to expand, research, etc. etc. Their declining margins,  however, tell another tale: one of a company whose long-term solvency and profitability is in doubt.

 http://beta.fool.com/tmloyd/2013/02/11/world-wide-web-investment-here-today-gone-tomorrow/23612/?ticker=AVG

So what do Forbes contributor Jim Oberweis and Seeking Alpha contributor Eiad Asbahi see for the company? 

3 Slow Growth Small-Caps with Big Potential – Forbes 

Forbes’ numbers are inaccurate in the article.  AVG Technologies has more than 110 million computer users.  While they have been losing share, according to Opswat, they claim an active user base of 143 million users.  Some of this is attributable to 25 million copies of their Internet Security Suite (the paid) product given to purchasers of Huawei (Yes, that Huawei) mobile devices, in India.  

Forbes contributor Jim Oberweis likes AVG for the company’s PEG ratio, growth prospects, and the fact that the free product received a PC Magazine Editor’s choice award.  He likes the Google relationship. See links at the bottom of this blog for relative rankings of the paid AVG Antivirus and AVG Internet Security  solutions. The print article will be in the February 11 issue.

 

http://www.forbes.com/sites/investor/2013/01/23/three-slow-growth-small-caps-with-big-potential/

AVG: Feb 1st Google Policy Updates Threaten AVG's Growth Engine, Signals Steep Downside

In a  January 31 Seeking Alpha article,  Seeking Alpha contributor Eiad Asbahi is forecasting a share price of $8.50 to $10 per share (elsewhere in the analysis, the figures are $7.30 to $10.28).  This is based on an extensive quantitative analysis based on a supposed change that will be occurring in Google’s toolbar policy.   

According to the article, “Google (GOOG), AVG's primary search partner and currently the source of substantially all of AVG's Platform-derived revenue, is on the verge of announcing an update to its toolbar policy, something that has not been widely followed or discussed by market participants.”  This would require companies to make use of “opt-out” instead of having “opt-in” checked automatically on the customer’s behalf.  Opt-in has been a point of consternation among many users of many software packages.

In the article, he mentions Yahoo CEO Marissa Mayer was asked about this policy change.  Her response,   "On the Toolbar change from Google, we'd be remiss to offer comment on another company's product, so I'm not going to comment further there.”  AVG Technologies has a toolbar  agreement with Yahoo as well as Google. Previously, they had been exclusively one company or the other.

Asbahi did some number crunching based on different churn rates for users prior to and after February 1, 2012, an opt-in rate of 65% and per user revenue from Yahoo search bar users at 50% of Google tool bar users.  After all of his number crunching,  his estimates for AVG Technologies 2013 revenue to be between $248M and $287M,  an “ implied market capitalization and target price would between $399M and $569M, or $7.34/share and $10.28/share respectively.” On CNETs download site, AVG averages around a million downloads a week, suggesting major churn.

From a November 1 Financial Times blog,  “J R Smith, chief executive of AVG, admits that being the first in the industry to offer free products has “kind of put us a little bit in a box”, but slowly the company is succeeding in convincing investors that AVG has evolved from offering just hardcore security into other services and platforms”  http://blogs.ft.com/beyond-brics/2012/11/01/corporate-watch-avg-breaks-out

AVG made a buy versus make decision regarding mobile security in November 2010 with a $4.1 million acquisition of Droidsecurity to gain entry into mobile security market. 

AVG Technologies should be reporting their earnings on February 21.    

    

For some comparative reviews of paid antivirus and internet security products by PC Magazine, go to:

http://kensek.blogspot.com/2012/09/best-antivirus-2013.html

http://kensek.blogspot.com/2012/09/best-internet-security-suites-2013-best.html

 

About OPSWAT www.opswat.com    

Founded in 2002, OPSWAT is the industry leader in software management SDKs, interoperability certification, and multiple-engine scanning solutions.

OPSWAT market share reports are available at http://www.opswat.com/media/reports    

Google Agrees to Pay $22.5M for Apple Browser Breach

To paraphrase  a song from several years ago,  “Oops, you did it again.”  Google will pay   $22.5 million to settle allegations by the U.S. Federal Trade Commission that it breached Apple’s   Safari Internet browser to track individuals browsing behavior.    To put the size of the penalty into perspective, at the end of the last fiscal year, Google had total cash of $41.7 billion.  The penalty won’t  put too large a dent in their cash.  

According to the FTC, Google deceived consumers and violated terms of a consent decree signed with the commission in 2011 when it planted   cookies on Safari, bypassing Apple software’s privacy settings.  This allowed Google track users’ Internet browsing behavior.  The FTC charged that Google's actions violated the  decree that was to prevent Google from misrepresenting the extent of control that customers have over the collection of their information.   

The FTC is empowered to levy penalties as large as $16,000 a day.  Perhaps a larger and more appropriate penalty, $4.99 per user.  In addition, force the little Android person to wear a cone of shame from Pixar’s “Up” and “Monster’s Inc.”  for a year on the Google search site.  Create a little cartoon app that causes the Android  to jerk its  head around when you type in either “cookie” or “squirrel”. 

This is the largest fine the FTC has ever levied against a company. The FTC  also ordered Google to disable all the tracking cookies.   The FTC is giving a fair amount of time for Google to come into complete compliance  Google has  until February 2014 to do so.  

  

 “No matter how big or small, all companies must abide by FTC orders against them and keep their privacy promises to consumers, or they will end up paying many times what it would have cost to comply in the first place,” stated FTC Chairman Jon Leibowitz. Other companies the FTC has entered into settlements on privacy allegations in the past  include Facebook,   Twitter Inc. and MySpace Inc.

“Trust no one” seems to be the operative phrase when it comes to protecting your personal privacy.  Individuals should read up on how to turn off tracking in their web browser,  both in Apple’s and other browsers. 

 http://www.businessweek.com/news/2012-08-09/google-said-to-face-fine-by-u-dot-s-dot-over-apple-safari-breach

AVG Technologies Acquires DroidSecurity, Teams with Google on Internet Security, (LinkScanner, AVG Security Toolbar)

AVG Technologies has yet to go through with their Initial Public Offering ( IPO) (it’s still business as usual on both the London Stock Exchange and Warsaw Stock Exchange, despite this!) http://kensek.blogspot.com/2010/07/avg-technologies-prepares-to-go-public.html for more information), Nonetheless, while the AVG Technologies IPO has been on hold, they have been busy.

On November 10, AVG Technologies announced the acquisition of DroidSecurity, a provider of tools and services to protect Android devices. On November 19, AVG Technologies announced that they were they were going to partner with Google broaden the search functionality of AVG’s Security Toolbar and AVG LinkScanner. http://www.avg.com/us-en/press-releases-news.ndi-284377 http://www.avg.com/us-en/press-releases-news.ndi-197

A December 30 AVG Technologies blog discussed, in part, how companies like AVG are working to make sure that additional security is available to protect smart phone users. http://jrsmith.blog.avg.com/2009/12/how-will-smart-phones-and-social-networking-affect-cybercrime.html This acquisition jumpstarts AVG’s role in protecting users on the Android™ operating system.

Prior to the DroidSecurity acquisition, mobile protection was a gap in AVG Technologies' product portfolio. Competitors have been offering protection for awhile (not for Droid obviously). For example, as paid products - Trend Micro offers Trend Micro Mobile Security (Symbian), Symantec offers Norton Smartphone Security for Symbian and Windows Mobile, Avast Mobile Edition (Palm, Windows CE, and Windows Mobile 5), Kaspersky Mobile Security (Windows Mobile, Symbian (on Nokia).

Protecting Android devices presents a nice opportunity for monetization (cutting to the chase, revenue!. According to Digitimes Research - Smartphones, tablet PCs and notebooks will all become the mainstream terminal devices in the mobile Internet market in the future with smartphone shipments having a chance to reach 800 million units in 2013. This is more than double from 2010, with tablet PCs at 100 million units and notebooks at 300 million units. http://www.digitimes.com/news/a20101118VL201.html

DroidSecurity has both free (over 4.5 million downloads) and paid ($9.99 US) version of their product. The pitch to upgrade:

• Complete protection from SMS spam, scams and phishing attempts
• VIP support
• No disruptions or advertising

DroidSecurity is a provider of mobile security solutions, for all Android™ devices (smartphones, e-readers, tablets and appliances). For more information on DroidSecurity http://www.droidsecurity.com/

AVG Facebook Fans, Pleased With the Switch to Google, Not As Pleased With Toolbar

There were a number of people clicking “like” on AVG’s fan page regarding the announcement (the flip side of this is that there are people who will click like on anything. There is no dislike option). For those taking the time to comment, there were a number of people pleased that Yahoo will no longer be the search engine installed with the security toolbar. There was also a significant number of people (around 25%), who had less than positive comments regarding toolbars, in general.

One Facebook fan commented, "Having "search" functions in tool bars are redundant. All browsers have selectable search bars built in now. All most ‘toolbars’ do is eat up memory and take up space.” Toolbar users will be able to use Yahoo on the AVG Security toolbar for another six months. Based on fan comments, though, it looks as if people will switch sooner rather than later.

Note that when people install AVG products, the box to install the toolbar is pre-checked. So people must actively opt out in order to not have it installed on their laptop/PC. It is an optional install and there are support pages on the AVG site and the web explaining how to uninstall it, for those who don’t wish to use it.

Possible Reasons for the Switch from Yahoo to Google

• From a business perspective, the Google search engine is a superior engine.
• The Google search engine has 2/3 of market share in the US. Yahoo has only about 1/6 of the market. http://www.comscore.com/Press_Events/Press_Releases/2010/11/comScore_Releases_October_2010_U.S._Search_Engine_Rankings

• This may increase AVG user’s installing/retaining/using the toolbar for searches and other purposes on the bar.
• AVG’s monetization opportunities, after product revenue, including OEM revenue, are on the toolbar, to a large extent.

It would be interesting to be able to compare the Yahoo contract to the Google contract to see whether AVG Technologies will accrue less revenue from Google on a “per something” basis, but will make up for it in volume. Customer satisfaction with the toolbar should increase. In negotiations, Google probably was the 800 pound gorilla.

For more information on the AVG Security Toolbar, go to http://www.avg.com/us-en/special-toolbar-first-run-tlbrc-v2-mcr7