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Cybersecurity: The Tech Companies More Important than the FANGs.

 5 min read / 

The products and services provided by the behemoths of the tech industry may seem indispensable, and the most fundamental features of the technological environment, however, there are a group of less glamorous firms that arguably are the necessary foundations of the whole industry: cybersecurity firms.

Cybersecurity is defined as the measures taken to ensure protection against unauthorised or criminal use of electronic data.

The world has become acutely aware in recent years that data is the new oil- and reserves are plentiful and exponentially growing. The amount of data in the digital world is growing so rapidly due to trends such as the ‘internet of things’ and ‘bring your own device’ (BYOD); the enormous amount of devices connected to the internet makes data abundant and cybersecurity a constant war ground.

The main antagonist in the cybersecurity realm is ransomware which is a pernicious software emanating from cryptovirology that poses the threat of making a victim’s data public, or permanently blocking access to it, unless a ransom is paid.

Therefore, as more data is created, more ransomware will inevitably be deployed. The ubiquity of ransomware is debilitating for anyone with data and internet access, but it represents a pot of gold for cybersecurity firms – the mercenaries of the technological age.

The Casualties

Everyone reading this will likely be aware of some large organisation that has been attacked by ransomware during 2017. Ransomware victims range from multinational companies such as Equifax and WPP to state institutions such as the NHS.

One of the most malicious attacks that has been seen was this year’s ‘WannaCry’ attack, which impacted 230,000 computers and 10,000 companies throughout 150 countries.

WannaCry infected 47 NHS hospitals, starkly highlighting the callous nature of these attacks. They are not just against multi-billion dollar institutes that are considered to line the pockets of the top 1%, but are also instigated much like actual warfare and terrorism, with no consideration for the innocence or relevance of its victims.

No sector is immune from cyber attacks and over 20% of institutions in financial services, education, entertainment, media, IT and telecoms have all been targeted recently.

One reason for the rapid increase in attacks is that it is becoming increasingly easy to launch a malware attack due to the ability to hire malware. By having the option to hire malware, criminals can launch attacks online with rented viruses which in turn opens up the battlefield to low-skilled, street criminals as well as highly-educated criminals.

The Figures

The opportunities available to cybersecurity firms are plentiful, providing they have the ability to innovate and stay ahead of the malware. The industry is so dynamic as attackers are constantly evolving and producing more vicious, efficient attacks and providing cybersecurity firms can produce the solutions to these attacks: they are indispensable to helpless victims.

The growth that has already been witnessed in this industry is evidence of the huge future potential for growth: the global cybersecurity market was worth $3.5bn in 2004, $64bn in 2011, $138bn in 2017, and is projected to be worth $232bn by 2022.

Furthermore, the US Bureau of Labor Statistics reports that by 2024 there will be an increase in the demand for cybersecurity staff by 36% – double the demand compared to digital workers in other fields.

The vast increase in demand for workers in cybersecurity corroborates the notion that this industry is on track to being one of the most important and lucrative sectors out there.

The Firms

Fortinet is arguably the market leader in cybersecurity and has a very large, diverse product base which enables it to trade with large and small firms. Its reports from 2017 Q1 showed a 20% increase in revenue and an increase in net income of 410% YTD, taking it to $10.7 million. Fortinet’s expected revenue for the entire year is estimated at $1.77bn.

CyberArk Software primarily focuses on protecting internal digital infrastructure, keeping privileged accounts safe, which includes the most sacred and hence potentially dangerous data.

In essence, if an attack manages to breach an initial firewall, CyberArk’s security will keep the crown jewels safe. CyberArk currently has flat earnings but is debt free and has amassed cash assets of $287m.

Furthermore, CyberArk is one of the pioneering companies in the industry and has an impressive client list of 3,200 and does business with 45% of Fortune 100 companies. Additionally, CyberArk acquired Conjur this year ($42m) which will allow it to expand into other areas of security.

Palo Alto Networks focuses on protecting data infrastructure and sells its products and services to 85 of the Fortune 100 companies. This year adjust EPS rose 32.6% to $0.61 and the 3Q revenue report showed a record of $432m, as well as gaining the second highest number of new customers since the business began.

Going Forward

It is clear that the growth potential for cybersecurity is enormous. In fact, some might even say that it is terrifying how dependent society will be on this industry in the near future. People must also not approach cybersecurity in a myopic sense and assume that it only has applications for large firms that have the capital to pay high-price ransoms.

The futuristic phrase of ‘cyberwarfare’ may seem reserved for the cinema screens, however, if hackers sitting in their bedrooms can wreak havoc on some of the biggest institutions in the world, imagine what a government-funded group of experienced, ruthless ‘cyber soldiers’ could do. Less than 10 countries have nuclear capabilities but any country with an internet connection could have access to cyber arms.

Conclusion

Finishing on a more positive note, cybersecurity is currently one of the most highly paid careers in technology with 39% of its employees earning more than £87,000 and 75% earning more than £47,000.

In the past, one would have to risk their lives for almost no remuneration to complete patriotic duty. Now, one can fulfil this moral craving whilst sitting at home, rather than in a dilapidated barracks.

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Companies

H&M to Shut Stores as Quarterly Results Plunge

 2 min read / 

H&M Results

Fashion retailer H&M announced today that it will be shutting down more stores after it experienced its biggest drop in quarterly sales in at least a decade.

Although group sales rose by 4% over the year, fourth quarter sales shrank by 4% year-on-year, to 50.4bn kronor ($6bn), as fewer customers visited its stores. This was far below the retailer’s expectations. Shares in H&M have now hit their lowest level in eight years.

H&M plans to adapt to changes in the market by closing more stores and selling the brand through Chinese online platform Tmall. It aims to integrate its physical and digital stores more, and will give more details on their strategy changes at a meeting with investors on February 14.

The company said:

“The quarter was weak for the H&M brand’s physical stores, which were negatively affected by a continued challenging market situation with reduced footfall to stores due to the ongoing shift in the industry[…] In addition, there have been imbalances in parts of the H&M brand’s assortment composition.”

The company’s rival, Inditex, the owner of high street brand Zara, as well as Massimo Dutti, Bershka and Pull&Bear, has continually outperformed H&M, as it expands more into e-commerce. However, this week, the Spanish giant also reported a slowdown in sales in its third quarter but said sales improved again in November given the colder weather.

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The studio will enable brands to build adverts that individuals users can include in their own snaps.

Snapchat is adding another trick to its repertoire by allowing users to add branded animations to the existing arsenal of augmented reality lenses. This is not a wholly new innovation as advertisers can already sponsor lenses, although there is a hefty minimum spend of $300,000 and a current need to work closely with Snap’s design team. However, the new studio will enable advertisers to create their own adverts, which will then need to be accepted by Snap before they are given the green light. The move is part of Snap’s wider efforts to diversify their revenue streams.

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Japan Is Behind Bitcoin’s Rise

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Deutsche Bank released a research note saying that Japanese investors account for bitcoin’s meteoric rise.

Deutsche Bank analysts have said they believe that individual Japanese foreign-exchange (FX) traders are instead moving towards leveraged cryptocurrency trading in the search for astronomical returns. Already, Japan makes up 50% of the world’s leveraged FX trading and Nikkei recently said that 40% of cryptocurrency trading was denominated in yen throughout October and November. Evidently, the Japanese are growing tired of years of ultra-low interest rates and are turning to the blockchain to boost their savings.

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