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Worms Are Big Business For Antivirus Vendors

Virus and worm attacks that increasingly plagued Internet users over the past year have proven profitable for Symantec Corp. and Network Associates Technology Inc.

The two leading antivirus software makers last week reported strong growth in antivirus software sales, citing persistent virus and worm outbreaks as largely driving that growth. However, their market leadership may come under fire in coming quarters as other vendors move into this market.

For its fiscal year, ended April 2, Symantec reported revenue of $1.87 billion, a 33% increase over last year's $1.41 billion. Net income for the year was up 50% to $371 million. For its fourth quarter, the company's IT-security sales to midsize and large companies comprised 38% of revenue and grew 30% year over year. Symantec's consumer desktop-security business grew 37% compared with the year-ago quarter and represented 48% of revenue.

Network Associates' revenue from sales to large companies was $59.31 million in its first quarter, ended March 31, up from $52.72 million a year ago. Taking away $6.69 million in sales of the company's new network intrusion-prevention IntruShield application, revenue was essentially flat year over year. Network Associates' sales to small and medium-sized businesses slipped from $68.7 million to $66.4 million. Consumer sales shone, growing 65% to $44.07 million.
That type of stellar growth is unlikely to last. As Microsoft continues to improve its desktop firewall bundled with its operating system and brings its Active Protection Technology to market, both Symantec and Network Associates could see their consumer antivirus sales threatened. Microsoft's efforts aim to stop all types of attacks and make it easier to secure its Windows operating system.

Network vendors such as Cisco Systems and Juniper Networks Inc. increasingly are adding security capabilities into their networking gear. "It's a knife fight," says Network Associates president Gene Hodges. "You have very competent firms here who are whaling on each other."

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