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Minyan Mailbag - A Gorrilla in their Midst

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Only time will tell!

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Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

Hi Fil ,

I appreciate your posts on Minyanville. I have also been puzzled by the decline in Symantec (SYMC) over the last month. While there is a lot of talk of the Veritas (VRTS) acquisition being the cause of the decline, I think that Microsoft (MSFT) fears are major reason for decline. Indeed, if you look at McAfee (MFE), it has declined from $33 to $25 while SYMC has declined from $34 to $23. So most of the price decline is due to industry P/E compression due to fear of MSFT aggressively entering the market, and less than 10% due to the VRTS acquisition.

Thanks,

Minyan Paul

Hi Paul,

I am not sure. My sense is that SYMC got where they are in terms of the enterprise quality of the product by spending $400M / yr. in R&D and $1.5 bln in acquisitions. If MSFT wants to roll out something more than a freebie that makes the occasional internet user feel good about net-threats, it will have to spend at least that much and then I doubt they'll give it away for free. Conversely, given that MFE and SYMC already own the space, for MSFT to spend all that money to develop an enterprise product only to compete on price (I am assuming that differences between MFE/SYMC and a would-be MSFT product would be negligible) does not seem like a good strategic move.

My sense is that within the consumer market, MFE and SYMC might suffer some "opportunity losses" - rather than "replacements" - from those who did not know security existed and now they are happy they are told they get something for free from Mr. Softee. All in all probably a marginal financial issue.

As always, please understand that this is shared with educational intents rather than advice.

Thanks,
Fil Zucchi

position in symc, vrts, msft, mfe
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