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SafeNet Soars, Hifn Sags

Is today a good day to be a security stock? Well, yes and no.

Shares of SafeNet Inc. (Nasdaq:
SFNT) shot up $4.80 (16%) to $34.50 in after-hours trading yesterday, as the company announced an unexpectedly large win with the U.S. Department of Defense (DOD). (See SafeNet Wins DOD Contract.)

Hifn Inc. (Nasdaq: HIFN) won't be as eager to hear the opening bell. Its shares fell 54 cents (9.3%) after hours, as the company lowered its revenue forecasts for the September quarter. (See Hifn Lowers Q4 Forecast.)

The two incidents have nothing in common other than their timing, both coming out after the market closed on Sept. 29. But they indicate that the ubiquity of network security hasn't made life so secure for the chip vendors in the business. As with many sectors, volatility can be a problem.

SafeNet announced yesterday a $150 million contract to provide its KIV-7M Link Encryptor (a box small enough to fit in a backpack but also available in 19-inch rack-mount form) to the DOD. It's the largest contract in SafeNet's history, and the DOD has already asked for delivery of $18 million worth of the appliances.

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