Several internet websites have recently been taken offline by what is reported to be a Distributed Denial of Service ("DDoS") attack. Radware (NASDAQ:RDWR), a foreign cyber security firm, specializes in protection against this type of issue. Clarification on technologies that have been breached may be important to the corporation, its competitors, clients, and industry dynamics.
Per currently available information the targets have been various. Web properties of firms including Amazon (NASDAQ:AMZN), Twitter (NYSE:TWTR) and Etsy (NASDAQ:ETSY) are included. Enterprises have been compromised. Something on this scale might ultimately be described as a national security issue, resulting from a state-sponsored plot, similar to findings on the Sony Pictures investigation (NYSE:SNE).
Radware's partner alliances have included Juniper (NYSE:JNPR), Cisco (NASDAQ:CSCO), Check Point (NASDAQ:CHKP), Alcatel-Lucent (NYSE:NOK), and IBM (NYSE:IBM) among others. Information may not be immediately available about whether Radware's solutions have been exploited. There is obviously a chance.
There is similar concern about competitors. Amazon is a rival in the application delivery solutions market (through the ELB service of AWS). Other companies of interest include Akamai (NASDAQ:AKAM), F5 Networks (NASDAQ:FFIV), and perhaps also Imperva (NYSE:IMPV) as shown below (Source 20-F):
Radware has been maintaining the position that on-premises equipment is needed for DDoS protection. This is in contrast to a trend toward cloud solutions, as evidence by the recent results of Barracuda Networks (NYSE:CUDA). Enterprise and service provider customers focus on the technology advantage of DDoS solutions, and medium-sized organizations often balance such criteria with other considerations, like cost and ease of procurement.
One of Radware's most recent press releases describes the opening of a new scrubbing center in Japan, and there is currently no information pertaining to an attack there. Just days ago it won Frost & Sullivan's Award for Product Line Strategy Leadership in DDoS Mitigation.
Its Third Quarter earnings announcement should already have been anticipated because it preannounced lower results but included commentary about subscription growth. There could have been a decline in equipment orders that is at least partially offset by future subscription sales. If so, it would be consistent with a transition into cloud business.
If Radware's defenses have held up and a competitor's have been exploited, it could be a boon for the stock. There might even be an arrested transition away from cloud based DDoS solutions. Third quarter commentary should be insightful for multiple reasons.
Disclosure: I am/we are long RDWR.
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.
Additional disclosure: I am short FFIV.