Analyst: EMC Damage Minimal After Cyber Attack
Analysts who track Hopkinton-based data storage giant EMC do not expect recent headlines about the company's security division being the subject of a cyber attack to have major ramifications for the parent company, one of MetroWest's largest employers.
News first broke in March that RSA Information Security had been hacked. The company, which EMC purchased in 2006, provides security solutions for companies around the world, including some of the top defense contractors in the United States. During the next few weeks, news continued to trickle out about the attack, including that Lockheed Martin security systems provided by RSA had been comprised.
But RSA represents only a small portion (just 4 percent) of EMC's business, so fallout from the data breach is not expected to have a major impact.
In addition, all the recent news about cyber attacks shows that security is not just a problem that EMC and RSA are dealing with, but could be much broader industry-wide issue, according to Dmitry Netis, an analyst with William Blair & Co. in New York.
After Effects
While the impact of the cyber attack could be minimal for EMC's bottom line, it is being felt at RSA, which is based in Bedford.
Revenues for RSA were actually up in the first quarter by 8 percent to $174 million, but the cost of sales rose more than 50 percent to $79 million.
Netis said he expects RSA's profitability to continue to slide because of the cost of replacing the SecurID products, which were involved in the breach. William Blair & Co. estimates there are between 30 million and 40 million of the products in the marketplace right now.
While RSA has not provided details about the attack, Art Coviello, RSA's executive chairman, did disclose that some information related to the company's SecurID products was taken during the hack. The SecureID system generates a number that customers can use to access protected information, which is combined with a password for extra protection. RSA has said that the information hackers may have stolen should not expose customer data.
Meanwhile, on the financial end, Netis suggested that the second-quarter results should provide a clearer picture of how much the attack will impact EMC and RSA financially.
Netis added that he doesn't expect RSA's top line to be impacted, just its bottom line. In fact, in the long term, all of the recent news about cyber attacks could actually push more people into the IT security market. The biggest question is if RSA can keep its dominant market share in that industry. Netis believes it can.
"RSA is a solid brand name," he said.
Whatever happens to RSA, it is likely to have a small impact on EMC, which gets the vast majority of its revenues from its information storage suite of products.
Meanwhile, local IT security businesses say the news that one of the state's leading security companies got hacked should be a wake-up call to all businesses.
"It's a problem that people aren't nearly paranoid enough about," said Andrew Moroney of Aisling Computers Inc. in Northborough, an independent IT consulting firm.
Many small businesses, he notes, don't even have basic protections, like virus scanners. Also, people should use common sense by not giving out passwords to co-workers and doing due diligence on who they trust their IT security software issues to.
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