Cybersecurity Stock Picks From Technology Analyst With William Blair And Company; The Wall Street Transcript Exclusive Interview With Mr. Jonathan Ho

67 WALL STREET, New York - November 22, 2011 - The Wall Street Transcript has just published its Internet Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Internet Infrastructure and Services Consolidation - Enterprise Adoption of Cloud Computing - Growing Cybersecurity Demand - Social Networking Economics

Companies include: Blue Coat (BCSI); TJ Maxx (TJX); Yahoo! (YHOO); AT&T (T); Akamai (AKAM); Alibaba Group (1688.HK); and many more.

In the following brief excerpt from the Internet Services Report, expert analysts discuss the outlook for the sector and for investors.

Jonathan Ho joined William Blair & Company, L.L.C., in 2005. He is a technology Analyst with a focus on cybersecurity and security technology. Previously, Mr. Ho worked as a lead Software Engineer and information technology Project Manager for seven years in the government/defense contracting industry. He holds a B.S. in finance and a B.S. in management science and statistics from the University of Maryland at College Park, Md., an M.S. in information and telecommunications systems from Johns Hopkins University, and an MBA in finance and accounting from The University of Chicago.

TWST: Please begin with a brief overview of your coverage areas.

Mr. Ho: I cover the cybersecurity space for William Blair And Company. My coverage universe includes a broad range of hardware, software and services companies that produce products such as endpoint antivirus, network security, compliance and security information event management solutions. The focal point of my coverage is on technologies and solutions that help modern day IT organizations protect themselves from cyberattacks.

TWST: Which names do you cover in that space?

Mr. Ho: Fortinet (FTNT), Sourcefire (FIRE), Check Point (CHKP), Symantec (SYMC), Blue Coat (BCSI) are the names that are tied to cybersecurity.

TWST: In which customer verticals or geographic regions do you see significant opportunities for the cybersecurity group right now, and who is best positioned to seize those opportunities?

Mr. Ho: I think the U.S. government vertical is one of the most important verticals in this space for a couple of reasons. First, we've seen a lot of breaches take place, which is causing the government to spend large dollar amounts in order to protect sensitive data and for national security purposes. Cybersecurity has become not just an issue for enterprises but also one which deals with nation-states. Cyberwarfare is an inexpensive way for hostile nations to harm other countries by targeting their critical infrastructure and military capabilities.

We believe governments are now increasingly concerned with cyberwarfare and its potential to become the fifth dimension of warfare. For many smaller startup companies, the U.S. government is also a marquee reference client that can help build a strong reputation in the cybersecurity space. The U.S. government is also willing to fund the development of newer technologies to help increase the level of security in their networks as well. In terms of other verticals, I think PCI compliance has been a very strong driver of cybersecurity spending in the retail vertical. PCI compliance is forcing many companies to increase their investment in cybersecurity to protect themselves against the loss or theft of credit card data. Companies such as TJ Maxx (TJX) and Heartland Payment Systems (HPY) have experienced cybersecurity breaches that have resulted in fines and breach-disclosure costs related to credit-card-number thefts. The companies impacted range from very small mall-kiosk-type retailers all the way up to large multibillion-dollar corporations. We think these requirements will only become tougher over time as the breach activity intensifies.

TWST: Please describe the competitive landscape for companies in this space. What are the best ways companies can distinguish themselves in this marketplace?

Mr. Ho: I do think the cybersecurity landscape is highly competitive. Large enterprise networking companies such as Cisco (CSCO) and Juniper (JNPR) have recently been losing share to smaller, more focused security companies. Sourcefire, for example, has been effective in competing against some of the very large IT companies out there such as Intel (INTC), HP (HPQ), Cisco, Juniper and IBM (IBM). They've actually been able to take share largely as a result of Sourcefire's strong technical capability and their focus on developing strong security-focused products.

Furthermore, Sourcefire has also been able to leverage the open-source community to provide continuous feedback in terms of how to improve their products and also how to improve their feature sets. The security focus manifests itself in the products that they're developing and their ability to think ahead of the curve in terms of how to improve their products. So net net, it seems like some of the larger players that are not security-focused are having difficulty retaining share versus security-focused vendors.

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