Surfcontrol boosted by internet hacking fears

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Increasing fears about “phishing” and spyware hacking attacks continued to push up sales at Surfcontrol.

However, the internet and e-mail filtering company on Tuesday admitted that rapid growth and the challenge of adapting to a rapidly-evolving security market were putting a strain on profits.

Revenues rose 12 per cent to $24.6m in the three months to the end of March, but pre-tax profits halved from $4.4m to $2.1m, because of increased investment in new technology, geographical expansion, and acquisitions.

“Security concerns are still central to a lot of organisations. Incidents like the keylogging attack at a Japanese bank last month continue to create fear and anxiety,” said Steve Purdham, chief executive.

“But it is no longer about a single threat,” he said. “Customers want protection from a whole range of threats including, viruses, spyware, porn, spam.”

In response, Surfcontrol, which started as a company focused on filtering spam and preventing employees from accessing porn sites, has been increasing the scope of its portfolio.

Moves have included the purchase last month of Apreo, the anti-spyware company for $6.8m.

Surfcontrol has also recently expanded into new territories, such as France, Japan and China.

“When you are pushing for growth it does put a load on costs,” said Mr Purdham. “It is all about putting stakes in the ground. We have invested more in technology and expansion than ever before.”

He said that while full-year numbers were likely to be in line with previous guidance, earnings before interest, taxation, depreciation and amortisation were likely to be at the lower end of the $16.7m to $17.7m target range.

Earnings per share fell from 10.6p to 6.1p.

“Phishing” refers to the practice of e-mails being sent to users purporting to be from institutions such as their bank and urging them to click on a web link to update their online account information. The link leads to a fake website where inputting details risks giving fraudsters access to actual bank accounts.

Surfcontrol shares were down 4 per cent at 525.5p in mid morning trade.

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