In Y2K There Is Anxiety, Opportunity
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Most of us will have to wait until New Year's Day to truly determine what impact the Year 2000 will have on our lives and jobs. IT professionals and investors in Internet security companies, however, are feeling the effects of Y2K now.
As 1999 heads well into spring, solving the Y2K problem has become a top priority for IT managers, who are charged with the task of making sure their networks don't wake up after the Times Square ball drops with hangovers or in the company of a stranger whose name they can't quite recall.
IT professionals who normally stay awake nights worrying about keeping hackers at bay instead are trying to ensure that they have a network to break into. That means less focus, and less spending, on firewalls, verification systems and other security products.
This softness in the market has led some Internet security companies to issue warnings about first-quarter revenues. Those warnings, in turn, have in the past two weeks triggered a precipitous plunge in the stock prices of several Internet security companies.
Network Associates (NETA) April 5 -- $29.44 April 6 -- $21.94 April 7 -- $16.00
ISS (ISSX) April 1 -- $79.50 April 6 -- $69.75 April 9 -- $60.75
Checkpoint Software (CHKP) March 31 -- $43.00 April 5 -- $28.81 April 7 -- $26.75
Axent Technologies (AXNT) March 29 -- $32.25 March 31 -- $24.06 April 1 -- $20.00 April 5 -- $8.06
All four may have bottomed out for now. Opening prices this morning for each were: Network Associates, $16.94; Checkpoint, $30.34; and Axent, $11.06. ISS opened at $59, even lower than Friday's close, but had moved up to $61.50 by late morning.
Of course, not every Internet security company has taken the April plunge. Verisign, which closed at $59.13 in Dec. 31, innoculated itself with news of a stock split on March 31, when it closed at $154. Despite a two-day drop last week, the company was trading this morning at $156.75.
While the Y2K phenomenon may be causing anxiety for current Internet security shareholders, it also is presenting opportunities for other investors to grab security shares at better prices.
Expect this pattern to repeat itself three months from now, when Internet security companies start preparing the market for Q2 earnings reports. That could be the next chance to get a bargain.