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Palo Alto Networks Nabs Cisco, Juniper Market Share … Again

Palo Alto Networks ( PANW ) last quarter again nabbed market share from rivals  Cisco Systems ( CSCO ), Check Point Software Technologies ( CHKP ) and Juniper Networks ( JNPR ), a Piper Jaffray analyst wrote Monday ahead of Palo Alto’s fiscal Q2 earnings late Thursday. In a survey of third parties selling Palo Alto products, half said Palo Alto is most consistently beating out Check Point, Piper Jaffray’s Andrew Nowinski wrote in a research report. “Cisco, Check Point and Juniper have consistently been called out by resellers as the vendors most frequently losing to Palo Alto,” he wrote. “These are also the top vendors in the firewall market, suggesting Palo Alto continues to gain share at the expense of all the major vendors in the space.” That’s sure to rile Cisco, which last week  unveiled a next-generation firewall in direct competition with Palo Alto, Check Point, Fortinet ( FTNT ) and Intel ( INTC )-owned McAfee. It was also the first time that Check Point was cited as the vendor Palo Alto beats most often, Nowinski wrote. Nowinski retained his rating on Palo Alto Networks stock to overweight, with a 208 price target. At least three other analysts, however, cut their price target on Palo Alto stock Monday ahead of the Thursday earnings report. Sales, EPS Seen Decelerating Palo Alto stock was up 1% in afternoon trading on the stock market today , but rival  FireEye ( FEYE ) was up 9%. FireEye announced Hewlett Packard Enterprise ( HPE ) as its global alliance partner of the year. For fiscal Q2 ended in January, Palo Alto Networks is expected to report $318.3 million in sales and 39 cents earnings per share ex items, up 46% and 105%, respectively, vs. the year-earlier quarter. It would be its first quarter eclipsing the $300 million-mark. But sales and EPS minus items are expected to decelerate for the second consecutive quarter, according to the consensus of 40 analysts polled by Thomson Reuters. The consensus model is in line with Palo Alto’s earlier guidance for $314 million to $318 million and 38 cents to 39 cents. Palo Alto stock is down 28% this year, slightly worse than IBD’s 25-company Computer-Software Security industry group, which is 24% off its 2015 closure. Cybersecurity stocks were pounded in January on a perceived slowdown in spending after gloomy reports from firms like Tableau Software ( DATA ) and LinkedIn ( LNKD ). Neither Nowinski nor Dougherty analyst Catharine Trebnick see that slowdown for Palo Alto. Trebnick maintained her buy rating and 215 price target on Palo Alto stock. She urged investors to compare Palo Alto to direct next-generation firewall vendors. Firewall Vendors Outperform Peers Barracuda Networks ( CUDA ), CyberArk Software ( CYBR ), Proofpoint ( PFPT ), Imperva ( IMPV ), Rapid7 ( RPD ), Qualys ( QLYS ), Splunk ( SPLK ) and FireEye “have provided a seemingly negative read-through for Palo Alto Networks,” Trebnick wrote in a research report. “Unlike elsewhere in security, next-generation firewall vendors that cater to enterprises have all managed to produce good enough results for investors.” Trebnick expects Palo Alto to beat consensus expectations. Wildfire and Traps are driving higher attach rates, she wrote. Wildfire is Palo Alto’s cloud-based malware-analysis system, which competes with FireEye. Traps is an endpoint-security product. Over the past 12-16 months, Palo Alto has expanded its suite of products to seven from four, Trebnick wrote. Together, Palo Alto touts them as a “next-generation security platform.” “Our sources have indicated that they are now seeing increased success from this approach as enterprises are broadening their purchases to include more of the auxiliary software subscriptions,” she wrote. Trebnick and Nowinski alike see a strong April-quarter pipeline for Palo Alto. Nowinski said he expects a 3%-4% upside to Q3 guidance despite typical seasonal weakness.

Apple’s iPhone Privacy Stand Draws Tech Industry Support

Apple ‘s ( AAPL )  refusal to give in to federal demands to loosen iPhone security for law enforcement agencies has earned praise from tech industry executives and civil liberties groups. But some politicians and criminal investigators have slammed Apple’s actions, as the privacy vs. security debate rages. A federal judge on Tuesday ordered Apple to provide “reasonable technical assistance” to the FBI to unlock an iPhone belonging to one of the killers in the San Bernardino, Calif., shootings. The order calls for Apple to create software that can get around or disable the security option that erases data from an iPhone after 10 unsuccessful attempts to unlock it. Syed Farook and his wife, Tashfeen Malik, shot and killed 14 people on Dec. 2. The radicalized Muslim couple, described in press reports as supporters of terror group ISIS, later died in a gun battle with police. But late Tuesday, Apple CEO Tim Cook said complying with the court’s order would create a “ dangerous precedent .” The government’s demands threaten the privacy and security of all of its customers, he said. It would create a backdoor for hackers, criminals and government spies to exploit. Among the earliest to support Apple’s pushback to the court order were digital rights groups Electronic Frontier Foundation and Fight for the Future, as well as Edward Snowden, the ex-NSA contractor who revealed the government’s widespread surveillance programs. Also jumping in to support Cook’s message were Sundar Pichai, CEO of Alphabet ( GOOGL ) unit Google, and Jan Koum, Facebook ( FB ) board member and WhatsApp founder. Reform Government Surveillance, a coalition of major online companies, also supported Cook’s actions. Members of the group include AOL, Apple, Dropbox, Evernote, Facebook, Google, LinkedIn ( LNKD ), Microsoft ( MSFT ), Twitter ( TWTR ) and Yahoo ( YHOO ). Officially, though, few companies have issued a public opinion, nor have many tech CEOs. “RGS companies remain committed to providing law enforcement with the help it needs while protecting the security of their customers and their customers’ information,” the group said in a statement . Other groups backing Apple in its stand include the Information Technology Industry Council, American Civil Liberties Union and the Consumer Technology Association. Government Order Seen Opening ‘Pandora’s Box’ “Government should not mandate that technology companies weaken security that has been developed to protect consumers, even when investigating crimes,” Gary Shapiro, chief executive of the Consumer Technology Association, said in a statement. “Granting government such power could open a Pandora’s Box, setting a troubling precedent and weakening security standards that could be exploited by the very people the government seeks to protect our citizens from — terrorists, hackers and foreign governments.” Mark Cuban, billionaire investor and owner of the Dallas Mavericks, defended Apple’s decision in a post on his blog Thursday . He said Apple did the “exact right thing by not complying with the order.” “Every tool that protects our privacy and liberties against oppression, tyranny, madmen and worse can often be used to take those very precious rights from us,” Cuban said. “We must stand up for our rights to free speech and liberty.” Meanwhile, politicians who favor giving the federal government greater powers to combat terrorism spoke out against Apple’s decision to fight the court order. The White House backed the FBI’s demand and court order. Republican presidential candidate Donald Trump sided firmly with law enforcement on the issue. “To think that Apple won’t allow us to get into her cellphone? Who do they think they are? No, we have to open it,” Trump said during an interview on Fox. New York Police Department Commissioner Bill Bratton also backed the feds. “We are increasingly blind for terrorism purposes and for general law enforcement purposes with the new devices and the continuing effort to make them even more secure against even court orders authorizing law enforcement to have access,” Bratton said. The family of a British soldier murdered by Islamic extremists also criticized Apple’s refusal to abide by the court order. Apple is “protecting a murderer’s privacy at the cost of public safety,” Ray McClure, the uncle of Fusilier Lee Rigby, told the BBC. Rigby was off duty when he was killed near his barracks in Woolwich, England, in May 2013. Two men who committed the attack said they were avenging the killing of Muslims by British soldiers.  

Twitter Video Service Must Dodge Facebook ‘Torpedo’ In 2016

Twitter ( TWTR )’s  live video broadcast app Periscope will have to dodge a big “torpedo” from rival Facebook ( FB )’s live video service, Edison Research said Thursday. And Twitter must offer more than microblogging and instant messaging services if it ever wants to significantly expand its user base and see the kind of social network growth being enjoyed by Facebook, LinkedIn ( LNKD ) and Alphabet ( GOOGL )-owned Google, wrote Edison analyst Richard Windsor in a research report following up on Twitter’s Q4 earnings late Wednesday.  “ In the last three months, Twitter has underperformed its rivals — Facebook, LinkedIn and Google — all of whom have seen the size of their user base expand,” wrote Windsor, who said Twitter currently appeals mainly to a niche group of hardcore users, including marketing reps and journalists. Beyond its microblog, Windsor said Twitter should widen its use of Periscope, the live video broadcast app it purchased in January. “This is a priority for Twitter in 2016 and it clearly intends to develop this service into a go-to place for watching live broadcasts,” he said. “If it can do this successfully, then it will be able to emerge as a competitor in the media consumption space, which is where Facebook and Google are currently seeing strong revenue growth, but Periscope needs to dodge Facebook’s live video torpedo.” Facebook’s deep pockets will be a challenge to Twitter, Windsor said. “The problem is that Facebook is competing directly in this space and has far more resources upon which to rely to ensure that Periscope fails to really gain traction,” Windsor said. Twitter Core Problems: Usability, Accessibility While Periscope is a long way from its goal of being “a major force in video broadcast,” Windsor said, “If it can become a ‘go-to’ place for live video, then we suspect that the user base would once again start growing. This would have a big effect on both revenues and the valuation of the company.” Macquarie Capital analyst Ben Schachter also says that 2016 will be a critical year for Twitter, which saw its price targets cut by at least nine analysts Thursday and its stock fall  after the company said user growth slowed in Q4, for the fourth consecutive quarter, raising concerns that usage has peaked. “We think that it needs to fix its core usability/accessibility problems first,” Schachter wrote. “We broadly agree that these are the correct focus areas for Twitter, particularly the potential for video. Having said all that, obviously execution has been an issue and we want to see some real progress. “In some ways, this should be simple: Facebook has provided a compelling model for usability and monetization, but Twitter needs to execute.” In December, Facebook opened its live video streaming service to all users in a bid to take on Twitter-owned Periscope and Meerkat. Facebook said the service is being tested in U.S. with a “small percentage of people” on iPhones, after originally releasing a live streaming feature earlier this year for celebrities. Twitter stock hit a new all-time low on Thursday, at 13.91 and was down more than 4% in midday trading in the stock market today , near 14.40. Twitter has remained below its IPO price of 26 since mid-December, sparking buyout talk. Shares of Alphabet, Facebook and LinkedIn were all down roughly 1% midday Thursday, in another rough day for the stock market overall.