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IBM To Acquire Resilient Systems, Undercut Cisco, Symantec, FireEye

Tech giant IBM ( IBM ) plans to undercut Cisco Systems ( CSCO ), Symantec ( SYMC ), FireEye ( FEYE ) and Rapid7 ( RPD ) by acquiring incident response firm Resilient Systems and partnering with endpoint security provider Carbon Black, the company announced Monday. The announcement comes a week after IBM unveiled a deeper tie to No. 1 cybersecurity pure-play  Check Point Software Technology ( CHKP ) to pool research and integrate systems. IBM stock was up 0.9% in morning trading on the stock market today . IBD’s 25-company Computer Software-Security industry group was down a fraction Monday as companies headed to the RSA Conference, a massive cybersecurity industry gathering that runs all week in San Francisco. Caleb Barlow, vice president of IBM Security, described the Resilient Systems acquisition as the cornerstone of a three-prong strategy to protect, defend and respond to cyberbreaches. Per IBM policy, he wouldn’t disclose the price tag for the privately held, 100-employee company. “This ultimately gives us the ability to expand from protecting and defending the enterprise to also being able to respond to a breach,” Barlow told IBD. “This combination of a new acquisition and the associated partnerships really make a move into the incident-response space.” Carbon Black Has Big Share Of Endpoint Security In conjunction with the acquisition, IBM will partner with endpoint security firm Carbon Black. Privately held Carbon Black owns 37% of the endpoint market, according to industry tracker IDC. Carbon Black’s platform will allow IBM analysts to conduct security forensics on compromised endpoint devices. Resilient Systems will be integrated into IBM’s incident-response platform, dubbed X-Force Incident Response Services. Via X-Force, IBM will counsel clients through all parts of a cyberbreach and on ways to avoid such breaches. Barlow likened the service to a fire drill. “Most companies don’t have good incident-response plans,” he said. “There’s a binder on the shelf for what to do in the case of a fire or what to do in the case of a flood, but not necessarily what to do in the case of a cyber incident.” That “binder” includes pertinent leadership, disclosure and public relations keys in case of a breach, he said. IBM’s move allows the company to “pivot” from protecting and defending to responding to a breach, he says. It’s all part of IBM’s push into the cybersecurity market. In 2015, IBM pulled in $2 billion in security revenue. That was up 12% but still accounted for only 2.4% of IBM’s total revenue of more than $81 billion, which fell 12%. But the dollar amount topped total sales for security pure-players Palo Alto Networks ( PANW ), Proofpoint ( PFPT ), Fortinet ( FTNT ) and FireEye. And IBM’s security business also outgrew Symantec and Check Point. The security unit was launched four years ago, Barlow says. Since then, it has added 7,300 employees — 1,000 last year alone — and operates in 133 countries globally. “Imagine if that were the conversation about a Silicon Valley startup,” he said.

IBM Cements Security Standing With Redoubled Check Point Alliance

Tech giant IBM ( IBM ) is solidifying its cybersecurity standing by deepening ties to No. 1 pure player Check Point Software Technology ( CHKP ) to pool research and integrate systems, the companies were scheduled to announce Thursday. It’s the most recent in a series of IBM moves to publicly step-up its cybersecurity initiatives. In 2015, IBM drew in $2 billion in cybersecurity sales , just 2.4% of total revenue. But that dollar mark easily topped total sales for Palo Alto Networks ( PANW ), Proofpoint ( PFPT ), Fortinet ( FTNT ) and FireEye ( FEYE ), and 12% year-over-year growth outstripped that of Symantec ( SYMC ) and Check Point. By combining forces, IBM and Check Point aim to thwart what the United Nations estimates is the $445 billion cybercrime underworld. Check Point’s and IBM Security’s researchers will be free to cross company borders to discuss threat data. And several Check Point applications will be folded into IBM technology, Check Point’s vice president of security services, Avi Rembaum, told IBD. The alliance redoubles an 18-year relationship between IBM and Check Point. IBM manages security offerings for clients across the globe, and those implementations sometimes include Check Point products. The two companies have partnered in that regard for the past 18 years. Thus, IBM is keenly apprised of Check Point’s software. Under the new accord, Check Point will further school IBM on its tech. “Tightening the relationship means we’ll be giving IBM very deep guidance around exactly what fields they should be looking for and how systems integrate,” Rembaum said. The new alliance centers on four main keys. Check Point and IBM will combine research forces to create “a gigantic pool of security researchers,” Rembaum said. Doing so will expand the potential threat intelligence-gathering net, but also lend credibility to potential discoveries. “When we conduct research, it’s nice to have another leading organization with which we can provide notes,” he said. “It’s helpful to have a pool of researchers to validate assumptions. . . . When two sources say it’s true, it makes it more relevant and more critical.” But what’s more compelling is the integrated threat-prevention and analytics technologies, Rembaum says. Check Point will fold its SmartConsole application into the IBM Security App Exchange for integration with IBM’s Security QRadar Intelligence Platform. Together, the systems can tackle the entire security gamut — analyzing, blocking and mitigating attacks. The integration also means that a customer can operate within an IBM space but still access Check Point functions, Rembaum said. IBM customers will also be allowed to manage Check Point Mobile Threat Prevention within IBM’s MaaS360 enterprise-mobility management system, a software used to remove malicious apps and do quick security rollouts. Mobile is “the most critical space” for customers to protect, he said. “(Smartphones) are an always-on and always-connected vehicle for employees,” he said. “And they operate outside the corporate security perimeter.” The expanded alliance also allows IBM to manage Check Point’s entire suite of products for clients, Rembaum said. Check Point will expand the number of tools IBM supports. “So IBM can be there in lockstep with us when we offer services,” he said.

CyberArk, FireEye Both Miss With EPS Guidance, Shares Fall Late

CyberArk Software ( CYBR ) stock crashed late Thursday despite the firm’s Q4 beat after its earnings outlook lagged, while fellow security vendor FireEye ( FEYE ) came up just short on Q4 sales and missed with its Q1 bottom-line guidance. After hours, CyberArk stock reversed an uptrend at the closing bell and was down 7.5% on the disappointing guidance. FireEye stock was down 2.5% in after-hours trading. Both stocks had taken a hit last week after weak guidance from data analytics firm Tableau Software ( DATA ) raised fears of slower IT spending this year — including security spending — as global stock markets have sunk this year on macroeconomic worries. For Q4, CyberArk reported a record-smashing $51.5 million in sales and 39 cents earnings per share ex items, up 42% and 86%, respectively, vs. the year-earlier quarter. Both measures topped the consensus of 15 analysts polled by Thomson Reuters for $43.9 million and 20 cents, and the company’s earlier guidance for $43 million to $44 million and 18-20 cents. CyberArk wrapped up the year with a record $160.8 million in sales and $1 EPS minus items vs. consensus expectations for $153.3 million and 81 cents. Sales grew 56% and EPS rose 89% vs. 2014. Three months ago, CyberArk guided to $152.3 million to $153.3 million and 80-82 cents. EPS Outlook Trails Consensus Wall Street concerns of slowing cybersecurity growth don’t apply to CyberArk, which is “providing a very proactive type of security” and is not dependent on emergency response, CyberArk CEO Udi Mokady told analysts during the company’s earnings conference call late Thursday. But both 2016 and current-quarter EPS guidance trailed analyst expectations, drawing shares down sharply after hours. For Q1, CyberArk guided to 15-16 cents EPS minus items, lagging Wall Street expectations for 17 cents. The company’s guidance is flat to down 6% year over year. Sales views for $42.5 million to $43.5 million topped the consensus model for $41.6 million, up 30% at the midpoint. CyberArk expects to pull in $205 million to $207 million in 2016 sales, up 26%-28%, topping analyst projections for $202.3 million. But the EPS outlook for 83-86 cents fell short of the consensus model for 91 cents and would be down 15.5% at the midpoint of guidance. Privileged Account Security ‘Gaining Traction’ Mokady credited competitive displacements and an increasing number of seven-figure deals for the Q4 and 2015 gains. Existing customers are “taking larger chunks” when they return year over year to sign new deals, he said. Average deal size is about $100,000-plus, he said. CyberArk’s bread-and-butter — privileged account security — is gaining traction. Hackers orchestrating high-profile breaches, such as that of the federal Office of Personnel Management, couldn’t navigate a system without privileged credentials, he said. He likened the ever-growing awareness to the “significant trajectory” firewall security software enjoyed in past decades. That awareness helped CyberArk undercut a larger French competitor for a major deal with a U.S. airline that “turned to CyberArk because the incumbent’s software was process-heavy and could not enhance security” in the way CyberArk can, Mokady said. Last quarter, CyberArk also closed a seven-figure sale with a pharmaceuticals company, deployed six products for a large health care insurance provider, and sent out another half-dozen products for the software division of a large U.S. company, he said. And CyberArk’s Viewfinity is already seeing “strong sales traction,” Mokady said. Through Viewfinity, CyberArk added nearly 300 net new customers in Q4. CyberArk now counts about 2,500 customers, including 450 organically in Q4.  Last year, CyberArk spent $30.5 million to acquire Viewfinity, a maker of software designed to secure a network at its endpoints Meanwhile, the federal government on Tuesday unveiled a spending plan that includes $19 billion in cybersecurity initiatives. For CyberArk, that means building on record federal sales, Mokady said. Last year’s 30-day Cybersecurity Sprint, where the federal Office of Management and Budget gave agencies a month to improve their security included several privileged account-centric goals. “The 30-day sprint looks more like the first mile of a marathon,” Mokady said. “It’s not just a sprint and stop, but a lot of pipeline being built.” FireEye Q4 Losses Shrink FireEye, meanwhile, reported Q4 sales of $184.8 million, up 29% from the year-earlier quarter but just shy of the $185.3 million analyst forecast. On Jan. 20, however, FireEye had preannounced Q4 results, saying it expected sales of $184 million to $185 million. It posted a Q4 per-share loss minus items of 36 cents, better than the 38-cent loss in Q4 2014 and beating the 37-cent loss analysts had forecast. For Q1, though, the company said it expected to lose 49 cents to 53 cents per share, ex items, where analysts had forecast just a 40-cent loss. Image provided by Shutterstock .