Keeping computer data secure Axent Technologies aims to be leader


When Rockville-based Axent Technologies went public in April, investors drove up it's stock price 34 percent, to $18.75 from $14, in the first day's trading. That roar of support made Axent one of the hottest traded stocks in the U.S. that day.

So far, Wall Street's swooning hasn't waned for Maryland's newest publicly held company, which raised $36 million in the IPO. Axent's stock has risen as high as $21.75 since the April 24 public offering.

What's all the fuss about?

After all, Axent is a young company that posted a loss last year. And its niche in the computer industry -- developing and marketing security software and advice for business computer networks -- could grow more competitive as larger computer companies angle for a share of the booming worldwide market, say experts.

For now its biggest competitor is publicly held stalwart Computer Associates of Islandia, N.Y. But other heavies, such as Digital Equipment Corp., covet the computer security market too, and have products that compete with Axent's product line, analysts say.

What investors are betting on with Axent, say analysts, is the sheer magnitude of the growing global market for expertise and products that protect computer data from being lost or stolen, while it's transmitted between a company's headquarters, satellite offices, and customers, or from employees with computer access. Increasingly, a large amount of data, from billing and payroll records to confidential financial and medical records, are stored and transmitted around the world by computers, experts note.

Because of that vast storage and movement of data on computer networks, such information is at risk of being lost in hyperspace, or stolen and even altered, say experts. It's that phenomenon of the cyberspace age that has given rise to the need for internal computer network security.

Richard Lefebvre, Axent's chief executive officer and president, says his company is betting on more and more companies waking up to this fact: "The price you pay for the convenience of information systems is that data is everywhere. It can be lost or stolen without the right security."

The company, Lefebvre says, already has some of the nation's largest corporations, including Motorola and Wells Fargo, among its 150 customers.

Axent's growth, he said, will come from continuing to target the large business-client market, namely Fortune 2,000 listed companies which have multiple computer systems with complex networks and a huge number of computer users.

The company initially has targeted financial institutions and the telecommunications industry -- two of the toughest security markets -- to build credibility for its products, says the CEO.

Lefebvre said the company's marketing strategy for its complex technology is simple.

"We approach computer security as a business risk problem rather than a technological problem. It's a different approach, but one that makes a lot of sense to the people we're marketing to."

He said the company also is attempting to position itself as a "partner" of the big computer companies, like IBM, rather than as a competitor.

Paul Bloom, a San Francisco-based stock analyst who follows Axent for Volpe, Welty & Co., says that while the Rockville company must generate several new contracts with large corporations annually to keep profitability up, the company appears well positioned for growth.

For instance, he says, it's one of the pioneers in the information security field, and, as a result of its strong expertise, Axent now has a "compelling product line" that includes intrusion detection, access control and enterprise-wide security management.

Axent's main product is known as OmniGuard, a complementary mix of security software products that allows security needs to be centrally managed.

The company, said Bloom, is expected to unveil a new security product late this year called Enterprise SignOn that will give information system administrators greater control and monitoring ability over how and who can access information stored and relayed on computers.

That product, says Bloom, should significantly boost sales for Axent.

Bloom projects Axent, which earned $2.4 million in 1995, could see revenues climb from $14.7 million in 1995 to $20.9 million in 1996, a growth rate of 42 percent.

Driving this growth, notes Bloom, is the exploding market for computer network security software and expertise for what's known as client/server systems -- the niche Axent serves.

The Gartner Group, a technology consulting firm, estimates there's a a $17 billion worldwide market for companies that provide computer information security equipment.

Bloom pegs the segment of the market that Axent has targeted -- the multiple system computer systems that store and distribute information between a computer system inside and outside a company (called client/server systems) -- as a $100 million to $200 million global market.

He believes the client/server market for security software and equipment will grow as much as 45 percent annually as business executives decide to buy equipment to protect their companies from breaches in their information security.

Bloom notes that bolstering this prediction is a recent poll of U.S. businesses executives by the National Computer Security Association, a trade group, which found 50 percent reporting that their company had experienced computer security breaches.

Lefebvre at Axent believes that the United States, where Axent did 70 percent of its business last year, is a maturing market for his company but that there is strong growth potential in Europe and Latin America. He expects the company will generate 45 percent of its business overseas by 1999.

So bullish is the executive on his company's growth prospects that he's expecting to almost double Axent's 180-person work force in the next year to 18 months.

Much of that growth, he said should come at its European sales office in London and in Axent's research and development division at the Rockville headquarters.

"The key is remaining focused on what we do and whom we serve. Our only business will be business."

Pub Date: 6/02/96

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