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CEO INTERVIEW
Steve Chang of Trend Micro: Security details
Defending corporations against computer hackers and viurses is a thriving business for the Tokyo-based company. But will bigger rivals outmuscle it?
September 2002
Institutional Investor
Magazine
Trend Micro, Asia's biggest computer- security company, has been on a tear since its start in 1989. In 2001 it posted sales of $237.3 million and net income of $33.2 million. Since the terrorist attacks last September, the pace of growth has quickened: First-quarter revenues rose 47 percent, to $75 million. Net income increased only 19 percent, but at $13.1 million, margins are fattening.
The company's American depositary receipts are up 6.2 percent over the past year, to $23.95. Its price-earnings ratio is a rich 59, giving Trend Micro a market capitalization of $3.16 billion. Founder Steve Chang's 5.2 million shares are worth some $125 million.
Trend Micro concentrates on antivirus software that seeks to thwart computer viruses from attacking and wreaking havoc on corporate computer networks and systems. That's enabled the Tokyo-based company to benefit from a rare sweet spot in corporate technology spending: Computer security budgets have risen as fears of cyberterrorism -- such as a concerted attack to gain access to military networks -- have increased.
But hackers have been gaining the upper hand with attacks that combine a variety of techniques, such as viruses, worms and other "malicious" code. Last year's Nimda and Code Red attacks, for example, were both hybrids that combined viruses and hacker tools; they spread rapidly because they infected host computers on corporate networks. Nimda, in all of its forms, generated corporate losses of some $635 million, while Code Red cost companies $2.62 billion, according to Carlsbad, California-based researcher Computer Economics.
That's prompting rivals with greater financial resources, such as Symantec Corp. (which produces Norton antivirus software) and Network Associates (Mc-Afee), to acquire companies focused on firewalls, authentication and other processes, so they can offer more comprehensive suites of security software. In contrast, Trend Micro remains focused on antivirus protection, relying on strategic partnerships with companies like Check Point Software Technologies, Hewlett-Packard Co. and Sun Microsystems to augment and market its products, mainly under the InterScan VirusWall brand.
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