Security Software Plunges on Price Fears
Shares of security software makers fell, led by Check Point Software Technologies Ltd. (CHKP), on concern that the stocks have risen too high too quickly.
Check Point, which makes software that guards computer networks against hackers, tumbled $38.19, or 15%, to $208.69--its biggest decline since April 5. VeriSign Inc. (VRSN), a maker of software used to issue computerized IDs, slid $22.88 to $194.75, while rival Entrust Technologies Inc. (ENTU) fell $13.38 to $99.13.
The security software stocks have risen dramatically this year on optimism that sales will increase as corporations turn to the Internet to share data with workers, suppliers and customers. Computer vandals who disabled Web sites such as Yahoo Inc. earlier this year also contributed to the enthusiasm that security software sales would increase, pushing the shares up.
“The market is bringing back to earth some of the highfliers,” said Drake Johnstone, an analyst with Davenport & Co. “Check Point, VeriSign and Entrust are still up a huge amount.”
Check Point has fallen 25% since Friday. But even with the decline, the Israel-based company has more than doubled this year, while Entrust has climbed 65%. VeriSign has risen 2% this year and more than sixfold over the last 12 months.
Other security software makers that dropped included RSA Security Inc. (RSAS), which slipped $6.94 to $73.44; SonicWall Inc. (SNWL), which lost $5 to $118; Symantec Corp. (SYMC), which declined $3.06 to $68.88; and WatchGuard Technologies Inc. (WGRD), which fell $7.50 to $87.50.
VeriSign has slumped 21% since it agreed to buy Web-site address registry Network Solutions Inc. (NSOL) for $17 billion last week. Some investors are concerned that the company is overpaying, said Sean Jackson, an analyst with SunTrust Equitable Securities.
Network Solutions also faces a consumer antitrust lawsuit over redundant fees, plaintiff’s lawyer William Bode said. The company beat a similar suit in 1998.
Network Solutions fell $22.50 to $205.88 on Wednesday.
