Equifax breach is a boon for Symantec’s LifeLock service

Updated 6 hours ago

Shortly before Equifax revealed last week that it had been hacked, Fran Rosch got a call. The Symantec executive was vacationing in Maine, visiting his parents, when an Equifax representative telephoned to say sensitive information about 143 million Americans had been put at risk.

Armed with information only a handful of people had at the time, Rosch mobilized the rapid response team at LifeLock, the identity-theft protection service owned by Symantec. This included member services, legal counsel, product development, marketing and public-relations staff, he said.

Rosch knew the company would receive an onslaught of calls and sign-ups in the coming days — far greater than anything it had experienced before. And he was right.

“It was crazy,” said Rosch, the executive vice president and general manager of consumer business at Symantec. “It has been like an earthquake.”

Since news of the breach, LifeLock has seen six times its usual web traffic and the company is enrolling 10 times as many new customers every hour than before the attack was disclosed. “We’re over 100,000 new members and counting since the breach,” Rosch said. “Most are paying the full price, rather than discounts. It’s a really incredible response from the market.”

The stock price reflects Wall Street’s enthusiasm: Symantec shares are up about 10 percent since the Equifax hack was brought to light.

While much of the traffic to LifeLock’s site is organic, Rosch did say that the company purchased search terms associated with Equifax and the breach. A Google search for “Equifax hack” yields an advertisement for LifeLock at the top of the page.

“When we look back at the biggest breach, that was Anthem,” Rosch said. In the four days after Equifax’s penetration became public, LifeLock’s new sign-ups surpassed by several times its typical numbers. “This is an unprecedented event,” Rosch said. “It’s a whole different scale.”

New customers signing up as a result of the breach are, on average, 10 years younger than the service’s typical user, he said. They also tend to purchase the premium plan, which runs $29.99 per month, compared with the standard $9.99 monthly plan.

In addition to new customers calling to sign up, existing LifeLock customers are taking to the phones to find out what they should do in the aftermath of the hack. LifeLock updated its website to provide general information on the breach, but has had to triple the number of phone representatives it usually has to deal with the influx. Customer service representatives who work on other Symantec products, such as Norton AntiVirus, were trained to handle LifeLock calls to provide overflow support, and a third-party customer service partner is also fielding calls.

Though the number of inquiries and sign-ups is skyrocketing, Rosch said LifeLock hasn’t seen a notable increase in users calling to report identity theft and seek identity restoration services. “They know we’re all now watching, vigilant,” Rosch said of the hackers. “They’re going to keep a low profile for a little bit, maybe even for a year, while people have free credit monitoring in place. They’ll strike when we’re not looking.”

In the coming weeks, LifeLock plans to launch a television ad campaign discussing the Equifax breach. “This is a challenge we’ll live with for a long time to come,” Rosch said. “It’s also a great business opportunity for Symantec.”

The Equifax Impact On Symantec – Symantec Corporation (NASDAQ:SYMC)

Credits for the illustration go to Keloland’s article on the breach

In the last few days, Symantec (SYMC) has been running because of the massive Equifax (EFX) security breach. As part of the measures taken to deal with the breach, affecting 143 million customers, Equifax recommended the use of identity theft solutions.

It so happened that recently Symantec acquired Lifelock, a large player in the provision of identity theft solutions. As a result, Symantec was one of the stocks gaining a lot from the breach news. Also, right after the breach Equifax said it would be providing a free 1-year subscription for credit and identity theft protection to all its customers.

So What Is The Actual, Fundamental, Impact For Symantec?

There are several moving parts, but consider:

  • The free credit protection offered by Equifax is provided by Equifax itself. As a result, there is no direct business flowing to competitors.
  • However, the news-induced “panic” did lead to increased subscriptions elsewhere, including at Lifelock. On this regard, Bloomberg’s article titled “After the Equifax Hack, LifeLock Sign-ups Jump Tenfold” offers some detail.

Let us then see what actual impact we can derive from public information. “Tenfold” looks really impressive in that article, but we have direct quotes in it which give further color:

Since news of the breach, LifeLock has seen six times its usual web traffic and the company is enrolling 10 times as many new customers every hour than before the attack was disclosed. “We’re over 100,000 new members and counting since the breach,” Rosch said. “Most are paying the full price, rather than discounts. It’s a really incredible response from the market.”

So, from the breach until today Lifelock has gotten more than 100,000 new members. This kind of event fades very quickly from people’s memory (it’s like Home Shopping Network advertising, “act now!”), so most of the impact happens right away. As a result, the accelerated new membership pace will quickly fade. For a rough estimate, I’ll thus use an optimistic 200,000 total members gotten from the breach.

These new members will be spread between several pricing plans, going from $9.99 to $29.99 per month, with additional discounts possible. Lifelock has said that the new customers lean more towards the $29.99 plans than usual, and that they also make less use of discounts than usual. I’ll thus use an optimistic $20.00 average price for my estimates.

Taking these variables into account, we thus get a yearly impact of 200,000 x $20.00 x 12, or $48 million in additional revenues per year.

So what’s the relevance? Symantec has a $5.2 billion revenue consensus for 2017. $48 million is around 0.9% of those revenues. As a result, even though this event moved Symantec’s stock by more than 10%, its actual impact on revenues is minor.

In terms of earnings, if we optimistically ascribe a 10% net margin to Lifelock’s revenues, this would translate into a further $4.8 million in profits for Symantec. $4.8 million on 615 million shares is ~$0.008 per share. Even a 20% net margin adds just $0.016 per share.

Conclusion

The Equifax news made for a lot of speculative buying on Symantec, but the actual fundamental impact on Symantec’s business is tiny. Optimistically, this event might lead to less than a 1% positive impact on Symantec’s revenues and earnings.

My short thesis on Symantec remains the same. Symantec’s highest margin segment, consumer anti-virus, is in structural decline. Symantec posts growth through serial acquisitions but organic growth both lags and is much less profitable than the segment that’s dying. Furthermore, Symantec’s recent forced sale of its authentication business made its fundamentals even worse.

Disclosure: I am/we are short SYMC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

After the Equifax Hack, LifeLock Sign-ups Jump Tenfold

Panicked consumers are flocking to Symantec’s identity-theft protection service.

Shortly before Equifax Inc. revealed last week that it had been hacked, Fran Rosch got a call. The Symantec Corp. executive was vacationing in Maine, visiting his parents, when an Equifax representative telephoned to say sensitive information about 143 million Americans had been put at risk.  

Armed with information only a handful of people had at the time, Rosch mobilized the rapid response team at LifeLock, the identity-theft protection service owned by Symantec. This included member services, legal counsel, product development, marketing, and public-relations staff, he said. Rosch knew the company would receive an onslaught of calls and sign-ups in the coming days—far greater than anything it had experienced before. And he was right.

“It was crazy,” Rosch, the executive vice president and general manager of consumer business at Symantec, said in a phone interview on Tuesday. “It has been like an earthquake.” 

Since news of the breach, LifeLock has seen six times its usual web traffic and the company is enrolling 10 times as many new customers every hour than before the attack was disclosed. “We’re over 100,000 new members and counting since the breach,” Rosch said. “Most are paying the full price, rather than discounts. It’s a really incredible response from the market.” 

The stock price reflects Wall Street’s enthusiasm: Symantec is up about 10 percent since its close last Thursday evening, when the Equifax hack was brought to light. 

While much of the traffic to LifeLock’s site is organic, Rosch did say that the company purchased search terms associated with Equifax and the breach. A Google search for “Equifax hack” yields an advertisement for LifeLock at the top of the page. 

“When we look back at the biggest breach, that was Anthem,” Rosch said. In the four days after Equifax’s penetration became public, LifeLock’s new sign-ups surpassed by several times the “entire four, five weeks that Anthem was in the press.”

”This is an unprecedented event,” Rosch said. “It’s a whole different scale.”

New customers signing up as a result of the breach are, on average, 10 years younger than the service’s typical user, he said. They also tend to purchase the premium plan, which runs $29.99 per month, compared with the standard $9.99 monthly plan.

In addition to new customers calling to sign up, existing LifeLock customers are taking to the phones to find out what they should do in the aftermath of the hack. LifeLock updated its website to provide general information on the breach, but has also had to triple the number of phone representatives it usually has to deal with the influx. Customer service representatives who work on other Symantec products, such as Norton AntiVirus, were trained to handle LifeLock calls to provide overflow support, and a third-party customer service partner is also fielding calls. 

Equifax Breach to Lift Three Stocks

Sept. 12, 2017 3:41 p.m. ET

Piper Jaffray

After the market close Thursday,


Equifax



EFX 2.510608203677511%



Equifax Inc.


U.S.: NYSE


USD115.96


2.84
2.510608203677511%



/Date(1505250035941-0500)/


Volume (Delayed 15m)
:
6896287



AFTER HOURS



USD116.15


0.190000000000012
0.1638496033114867%


Volume (Delayed 15m)
:
41949




P/E Ratio
24.56779661016949

Market Cap
13616594214.8917


Dividend Yield
1.345291479820628%

Rev. per Employee
346747









More quote details and news »


announced a cybersecurity breach that could impact 143 million U.S. consumers, which equates to roughly 44% of the U.S. population.

The market is responding positively for cyber-security names, including


Symantec



SYMC 2.9923664122137406%



Symantec Corp.


U.S.: Nasdaq


USD33.73


0.98
2.9923664122137406%



/Date(1505250000269-0500)/


Volume (Delayed 15m)
:
9529386



AFTER HOURS



USD33.95


0.220000000000006
0.6522383634746517%


Volume (Delayed 15m)
:
410000




P/E Ratio
N/A

Market Cap
20126184280.3955


Dividend Yield
0.8894159501927068%

Rev. per Employee
331538









More quote details and news »


(ticker: SYMC), which should see a benefit to its LifeLock business.


FireEye’s



FEYE 0.6093845216331505%



FireEye Inc.


U.S.: Nasdaq


USD16.51


0.1
0.6093845216331505%



/Date(1505250000428-0500)/


Volume (Delayed 15m)
:
5352706



AFTER HOURS



USD16.5


-0.0100000000000016
-0.06056935190793458%


Volume (Delayed 15m)
:
54791




P/E Ratio
N/A

Market Cap
2989376840.18433


Dividend Yield
N/A

Rev. per Employee
251833









More quote details and news »


(FEYE) Mandiant has also been reported to have been contracted to investigate the breach. We believe mega-breaches like Equifax (EFX) not only create awareness for the security space, but typically result in an increase in spending by enterprises. Our top picks remain


Proofpoint



PFPT -1.2501370764338195%



Proofpoint Inc.


U.S.: Nasdaq


USD90.05


-1.14
-1.2501370764338195%



/Date(1505250000212-0500)/


Volume (Delayed 15m)
:
543758



AFTER HOURS



USD90.05



%


Volume (Delayed 15m)
:
1801




P/E Ratio
N/A

Market Cap
4051115788.88702


Dividend Yield
N/A

Rev. per Employee
281099









More quote details and news »


(PFPT) and Symantec.

Equifax’s breach occurred between mid-May and July. Customers’ names, Social Security numbers, birth dates, addresses and driver’s license numbers were stolen from the database, with an estimated 209,000 stolen credit-card numbers as well.

This breach is different than many of the other megabreaches we have seen. According to Mark Lanterman, a cyber-security expert and chief executive of Computer Forensic Services, the data stolen in this breach has no shelf life. Unlike credit-card numbers which can be easily cancelled, personal information such as SSN, birth dates, etc. do not change and can be sold and exploited for years. Mr. Lanterman said the data stolen in this breach are already being sold on the dark web for upwards of $1,000, whereas credit-card data typically only fetches $5-$25 per card number.

We believe the Equifax breach brings into question the credibility of using the Equifax credit-monitoring services over other competing services such as LifeLock. With pricing that is largely in line with LifeLock, we believe the breach will result in significant market-share losses going forward for Equifax.

Equifax offers a number of credit monitoring and identity-theft protection services, similar to Symantec’s LifeLock. Equifax’s solutions were launched in 2008, which include ID Patrol for $16.95 a month and ID Patrol Premier for $19.95 a month. The two services are similarly priced to LifeLock, which currently sells the Standard plan for $9.99 a month, Advantage for $19.99 a month and Ultimate Plus for $29.99 a month. The LifeLock plans not only include real-time credit monitoring, but also provide liability compensation and other services.

As is the case with most major breaches, it is being reported that FireEye’s Mandiant incident response team has been contracted to investigate and clean up the breach (according to ZDNET). This should be a positive for FireEye, as incident-response engagement typically results in product sales afterward.

According to Mark Lanterman, he believes the Equifax breach likely started via an email containing a malicious link or attachment. This is consistent with what Proofpoint said last week at their Analyst Day, where 90%-plus of sophisticated attacks target people, largely via email. Proofpoint is one of the only email-security solutions that can detect malicious links and attachments.

— Andrew J. Nowinski
— James E. Fish

The opinions contained in Investors’ Soapbox in no way represent those of Barrons.com or Dow Jones & Company, Inc. The opinions expressed are those of the newsletter’s writer(s) or analysts at research firms. Some of the research firms have provided, or hope to provide, investment-banking or other services to the companies being analyzed.

Comments? E-mail us at online.editors@barrons.com

3 Hot Cybersecurity Stocks in Focus Post Equifax Inc. (EFX) Data Breach

Cybersecurity stocks were seen soaring last Friday, after Equifax Inc. (NYSE:EFX) reported a massive data breach. Per the company, highly sensitive personal data of approximately 143 million consumers has been stolen from its database. Reportedly, nearly two-third of the adult U.S. population has been affected due to this cyber attack.

3 Hot Cybersecurity Stocks in Focus Post Equifax Inc. (EFX) Data Breach

The company late last Thursday announced that a data breach occurred between mid-May and July this year, which was discovered on Jul 29. Apart from some sensitive personal information, hackers have stolen credit card numbers of about 209,000 U.S. consumers and “certain dispute documents with personal identifying information” of nearly 182,000 U.S. consumers.

This is not the first instance when consumer data has been stolen from a company’s data base. However, sensitivity of the information exposed in Equifax’s data breach case makes it one of the worst in recent times. The latest data breach at the company will likely have a lasting impact as criminals can use the stolen resources for opening new accounts, applying for credit cards or loans, buying insurance, renting an apartment or even for tax frauds.

Shares of Equifax plunged nearly 14% last Friday after news of the cyber attack surfaced.

Cybersecurity Stocks Soar

The recent cyber attack at Equifax proved that most organizations across the world lack proper security measures.

Nonetheless, believe it or not, there is a positive side to this episode.  A cyber attack is good news for cybersecurity companies because it increases the chances of security-related purchases by the companies and governments. Hence, investors flock to these shares, shooting up share prices.

Equifax’s Thursday’s announcement gave a sharp boost to cybersecurity stocks, particularly identity protection security providers.

Symantec Corporation (NASDAQ:SYMC), which has been enhancing its identity-theft protection capabilities through acquisitions like LifeLock, gained the most with its shares witnessing a 3.4% rise.

This was followed by FireEye Inc (NASDAQ:FEYE), which is specialized in providing web security, email security, file security and malware analysis. The stock gained 1.5% last Friday.

Another cybersecurity company, Proofpoint Inc (NASDAQ:PFPT), went up 5.8% during trading hours. But it lost its momentum later to close at just 0.3% higher. The company is one of the leading security-as-a-service providers and focuses on cloud-based solutions for threat protection, compliance, archiving & governance, and secure communications.

Fresh Boost for Security Stocks

So far, the year 2017 has witnessed massive cyber attacks, including the two ransomware attacks — WannaCrypt or WannaCry in May and Petya in June — which created global havoc. However, the silver lining to this entire episode will be the further rise in demand for security-related products among enterprises and governments across the world. This is anticipated to drive share prices to new highs in the rest of 2017.

Furthermore, with rapid technological advancement, organizations are increasingly adopting the “bring your own device” (BYOD) policy to enhance employee productivity with anytime/anywhere access. This trend, in turn, calls for stricter data security measures.

We believe the urgency for stricter security measures will compel enterprises, as well as governments to increase spending on cyber security software. According to a Markets and Markets report, worldwide cybersecurity spending will likely reach $101 billion in 2018 and $170 billion by 2020.

Next Page

Symantec’s LifeLock may be a winner after Equifax hack

Top of the Order:  

A Winner From The Hack?: Last week, the revelation about the big hack at Equifax –a s many as 143 million Americans had the personal data exposed to hackers — brought up the worst of the worst in people’s minds about what could happen if their Social Security numbers and other private information got into the wrong hands.

Criminals could open bank accounts in your name. You could go to your mailbox and find statements saying you need to pay back lines of credit, or credit cards, in your name. Someone could even take out a driver’s license in your name, steal your tax refund, and maybe even start running up on-demand movie fees through your cable TV provider.

Symantec, Proofpoint Shares Rise On Equifax Data Breach | Stock News & Stock Market Analysis

Computer security stocks rose after credit score service Equifax (EFX) late Thursday announced a major cybersecurity breach exposed up to 143 million U.S. consumers.

Proofpoint (PFPT) broke out of a flat base and surged into buy territory by rising 4% to 95.65. FireEye (FEYE) was up 2.4% to 16.15 in early trading in the stock market today. And Symantec (SYMC) climbed 3% to 31.55.

“We view FireEye and Proofpoint as most positively exposed to breach-related spend,” said Walter Pritchard, a Citigroup analyst in a report. “Also, Symantec’s Lifelock business sells identity protection services and with a credit bureau breached, they could be a beneficiary. Equifax competes with Symantec in this market with its ID Patrol offering and Equifax’s ability to compete could be impacted by this news.”

FireEye provides web, email and malware security software to businesses and government agencies. Sunnyvale, Calif.-based Proofpoint specializes in email and data loss protection for corporate networks and cloud-computing infrastructure.


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Equifax said the breach occurred from mid-May to July 2017.

Equifax said it found no evidence of unauthorized use of its core consumer or commercial credit reporting databases. The data hackers accessed names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers.

Credit card numbers for about 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were also exposed.

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