Endace Share Discussion Threads

[knackers] 19/10/2011 10:07

Thanks for that Aspex, I'll do that.

I'm hoping to hear a little more from the Exec team whilst they're over next month. I sense a "subtle" shift in strategy - esp given that very recent PCI DSS article on the Aura tie-up.

Still some challenges I think for them commanding their channels to certain Govt agency market but am sure they're now actively mulling how best to overcome that - with the appropriate parties. From recent news/press it's clear the defence industry heavyweights (Raytheon, BAe, Northrup Grumman et al) now have VERY serious designs on this sector...particularly monitoring and surveillance, forensics/analysis and vulnerability scanning. From the cheap seats, given the accelerating trend toward faster network speeds, Endace are wonderfully positioned.

Also with the recent Exec top-slicing between May-Sep, I wouldn't expect a fire-sale any time soon. Looking at it again, it would appear that Sophrosyne have been around all the Inst'l holders with a begging bowl...with only the largest holders seemingly happy to top-slice:- Selwyn P, Neil R, L&G and BlackRock - and all transactions conducted at a premium price. That says it all...

Just how big could this business get before the whistle's blown I wonder..?

The next A U T O N O M Y....? Quite possibly now [IMHO]

[aspex] 19/10/2011 03:46

K,
If you would like to contact me on trade2win (where I use the same name) with a personal message, I will pass on some comments

[knackers] 18/10/2011 17:44

Even though the focus of coverage is Sourcefire. Love the reference to PCI and to larger names 'losing out' to smaller more nimble cybersec vendors, I wonder if we'll be hearing more about this with the 1 Nov results.

Source: Wall Street Transcript 18.10.11 -

TWST: Which names do you cover in that space?

Mr. Ho: Fortinet (FTNT), Sourcefire (FIRE), Check Point (CHKP), Symantec (SYMC), Blue Coat (BCSI) are the names that are tied to cybersecurity.

TWST: In which customer verticals or geographic regions do you see significant opportunities for the cybersecurity group right now, and who is best positioned to seize those opportunities?

Mr. Ho: I think the U.S. government vertical is one of the most important verticals in this space for a couple of reasons. First, we've seen a lot of breaches take place, which is causing the government to spend large dollar amounts in order to protect sensitive data and for national security purposes. Cybersecurity has become not just an issue for enterprises but also one which deals with nation-states. Cyberwarfare is an inexpensive way for hostile nations to harm other countries by targeting their critical infrastructure and military capabilities.

We believe governments are now increasingly concerned with cyberwarfare and its potential to become the fifth dimension of warfare. For many smaller startup companies, the U.S. government is also a marquee reference client that can help build a strong reputation in the cybersecurity space. The U.S. government is also willing to fund the development of newer technologies to help increase the level of security in their networks as well.

In terms of other verticals, I think PCI compliance has been a very strong driver of cybersecurity spending in the retail vertical. PCI compliance is forcing many companies to increase their investment in cybersecurity to protect themselves against the loss or theft of credit card data. Companies such as TJ Maxx (TJX) and Heartland Payment Systems (HPY) have experienced cybersecurity breaches that have resulted in fines and breach-disclosure costs related to credit-card-number thefts.

TWST: Please describe the competitive landscape for companies in this space. What are the best ways companies can distinguish themselves in this marketplace?

Mr. Ho: I do think the cybersecurity landscape is highly competitive. Large enterprise networking companies such as Cisco (CSCO) and Juniper (JNPR) have recently been losing share to smaller, more focused security companies. Sourcefire, for example, has been effective in competing against some of the very large IT companies out there such as Intel (INTC), HP (HPQ), Cisco, Juniper and IBM (IBM). They've actually been able to take share largely as a result of Sourcefire's strong technical capability and their focus on developing strong security-focused products. Furthermore, Sourcefire has also been able to leverage the open-source community to provide continuous feedback in terms of how to improve their products and also how to improve their feature sets.

TWST: What is the outlook for M And A in the cybersecurity sector over the next several quarters, and are there any kinds of deals or specific transactions that investors might want to keep an eye out for?

Mr. Ho: I think cybersecurity is going to continue to be a strong market for M And A activity. Large enterprise companies such as Intel, HP, IBM and EMC (EMC) have made acquisitions in the space over the past few years. We believe the larger enterprise companies recognize security as a key strategic vertical going forward, especially as they each try to build out broader technology stacks. What I think is going to happen is that we're going to see security companies continue to be acquired, and security used as a differentiator by these larger companies. We believe smaller players tend to be better at innovation and developing strong technology, but lack the distribution reach and brand in the marketplace.

TWST: What is your top-rated name in cybersecurity today and why?

Mr. Ho: The top name for me today would be Sourcefire. I really like the growth opportunity for the company. They recently expanded their distribution opportunity, which could potentially double the number of value-added resellers that they have available. I think that will start to have an impact on the financials in the next few quarters. The company has also expanded its product lineup in its core market and refreshed its core product as well, which I think will also help to accelerate sales. Sourcefire overall has some pretty exciting opportunities ahead of it. In the fourth quarter, the company plans to launch two new products in two brand new areas: the next-generation firewall space and the antivirus space.

[knackers] 18/10/2011 11:39

- L&G ditches another 1% of their direct holding (not the clearest of holdings RNSs)
- BlackRock top-slices too

So who's doing the hoovering? Surely not Sophrosyne again.

[knackers] 17/10/2011 12:32

...and still more stock is turned-over.

Edit: another 200k at 1310 BSD - relentless stuff.

Sophrosyne trades through the Cayman Islands. I wonder where the cash is coming from, exactly who's behind this. Seems a large commitment (overweight) for such a small outfit. Someone's confident!

Ben Taylor, the head of Sophrosyne, was at MIT for 6 years - knows his onions.

[knackers] 17/10/2011 09:11

Correct. The product will be a first.

Seems pretty clear the strategy is to diversify and broaden their markets; identifying where 100% capture, record/timestamping can add serious value. Sounds like they're just beginning to recognise the true potential of what they have. $100m annual revenues now must be a realistic near term (2-3 year) target for them. Thoughts?

I see Sophrosyne Capital have been buying again. What's their game I wonder? I wonder who they're acting for(?). For such a tiny investment house they're in a mighty hurry to get hold of stock and go massively overweight...all in a little over 6 months!...more than a bit niffy

[aspex] 17/10/2011 09:06

A couple of share moves that confirm the volume increases recently.
L&G down 112k and Sophrosyne up 315k.
Note the increase in US interests and they value investments at much higher multiples than UK.
Comment about Sophrosyne:
Sophrosyne Ventures is a specialist institutional investor managing a portfolio of high-technology investments. Sophrosyne seeks out high growth post-startup companies that it supports through the injection of capital and Board level expertise.

The company works with entrepreneurs to accelerate the growth of their companies through investment and advice. Sophrosyne manages the investment pool of, and co-invests with, its investor community creating value for through diversification, tax optimization, focus of effort, cost reduction and shared administration.

Sophrosyne's clients are experienced investors looking to invest a portion of their resources in a diversified portfolio of highly tax-efficient investments with the potential for high growth over a period of several years.

[aspex] 16/10/2011 07:12

K,
You are quick off the mark with that one.
My take is that Endace/Aura have no "real time" competition. It all depends on how the banks value their losses with payment card fraud and related matters.
What I like....
"The company is moving out of its niche of making network probes, and will now deliver all-in-one products that address a number of problems in a range of potential markets."
That is revenue generating beyond current levels. That idea makes it easier for potential customers to understand and value the worth of the product at user level without having to bring in external valuation.
This may indicate why they have been recruiting heavily since their market penetration will inevitably increase.

[knackers] 15/10/2011 17:36

Nice little piece in the NZ press about the Endace/Aura RedEye PCI DSS compliance in-a-box tie-up. It'll be a genuine world-first in real-time PCI vulnerability scanning and forensics. What's that market worth I wonder!?

[knackers] 15/10/2011 16:13

Nice spot, Stevo, yup you invest these amounts in new network infrastructure and it's a bit daft if you don't safeguard them or monitor their performance - Blackberry/RIM, I venture, would second that ;o)

Also just underlines how crucial high speed networks will be to our 'collective' future prosperity representing as it does a significant opportunity for competitive differentiation against other nations. You've just got to have skin in this game...the momentum towards 100Gb/s is relentless and migration inevitable.

But EU investment sanction or not it's happening right now with many Telcos/ISP being forced to roadmap and plan 100Gb/s (the vast majority appearing in 2013-2016 though a healthy smattering of early adopters will convert their core infrastructures to 100G/s in 2011-12...so the researchers say)

No question it's an ARMS RACE for us all, much as the "need-for-speed" was in FS/HFT esp between 2007-2011 and these guys are ALL now timestamping routinely in microsecs/nanosecs (NB If not, they choose to exclude themselves from the market, simple as that).

But as you rightly point out, this is one HELL of a wave for Endace to ride. If you want to capture, timestamp and record to disk 100% of packets "guaranteed" at these extreme line rates 10Gb/s-100Gb/s...let's just say the competition (Endace's) is a wee bit thin on the ground. Bottom line, you don't have to wait for 100Gb/s. For Endace, that's the icing on the proverbial cake, though that sort visibility, for their clients - in terms of future service capability - puts them at a huge advantage (Endace's 100Gb/s solution is 'oven-ready' when they need it). Lovely!

Yup, the penny will drop here soon enough ;o)

[stevo13] 15/10/2011 14:19

Interesting news with possibly huge rewards for EDA especially if they are soon to issue an rns about an upcoming 100G release

[knackers] 14/10/2011 17:23

Indeed that's a very substantial t/o of stock, Ed. Wonder if that excellent ML cybersec research report has woken a few Insts up from their somnambulant slumber. 'bout time, if so...

Technicals for the next 2-3 weeks v bullish (£5.50-£6.00) signalled. I think a sharp pump and dump could be on the cards... Don't be fooled by those antics. The fundamentals are all that's important - this is no jam tomorrow 'punt'.

[edwardt] 14/10/2011 16:20

NOW there is some proper volume going through.... surely an rns is due to follow soon to clarify

[knackers] 14/10/2011 09:26

SEC has moved quickly to issue this new guidance for cybersecurity/cyber-incident disclosure.

Whilst guidance for disclosure in this area isn't that much different to any other event that represents a significant business risk, I fully expect further regulatory attention and oversight being given to this growing problem. Future/punative class action is inevitable because of years of under-investment in network security/surveillance and an over reliance on defensive technologies such as firewalls & IPS.

The challenges of ensuring minimum network security and monitoring measures are being taken (across the network fabric) - to prevent, mitigate and investigate breaches - may result in regulators flexing muscles and conducting cybersec "dawn raids" to assess/check critical infrastructure orgs' network integrity...much like accounting practice oversight post Enron/Sox.

[aspex] 13/10/2011 20:18

New Edison Research report is out

or login for the full pdf

[edwardt] 13/10/2011 16:40

another 50k shares printed before close!

[knackers] 13/10/2011 14:33

More on the global defence industry being at the eye of the cybersec-storm (focus on Raytheon "now that's a lot of attacks!"):

[knackers] 13/10/2011 13:33

Perhaps not at today's late morning prices. But if the buying continues they'll have to move this on again. Holders in control : stock closely held. I think there's a lot of ground for this stock to make up. Don't think folk have really woken-up to what they have, the size of the addressable market and the fact that they're in the middle of their Growth Phase.

[edwardt] 13/10/2011 13:19

r u saying panmure are short on their book?

[knackers] 13/10/2011 13:03

The (forced) seller we've seen in the market in recent weeks seems to have packed-up and clearly there is a substantial buyer now fishing for stock, driving this momentum.

This selling looks v orderly to me (house broker begging!) and they will have 'called' £4.50 as their first acceptable offload price. Holders of stock are clearly back in control and with the formal results imminent would expect their next acceptable bid stop off/top slice price to be north of £5 - if someone's looking to accumulate in reasonable quantities that is.

Very much doubt directors/past directors will be selling into such 'weak' strength...unless absolutely necessary. IMHO given the orderly selling they instigated after 10-11FY results (SP and NR) they'll now have the cash they need and will be locked-in for the duration...

[edwardt] 13/10/2011 11:48

x directors takings some more chips off the table ? some reasonable vol going through

[edwardt] 13/10/2011 08:49

if any of you can get your hands on a recent Merrill Lynch report on cyber crime called 'The Silent War' it details all small cap stocks involved with a market cap >$50m. Endace gets a little mention.

[knackers] 12/10/2011 09:02

All good news Aspex, leads into the formal results announcement and investor presentation rounds nicely. A formal upgrade on 11-12FY results is likely to accompany those, unless they're feeling brave in the interim. (I haven't seen a PG flash note yet!)

Endace is rapidly coming of age and it looks as though it's all going to happen in the next 6 months. Clearly there's something MAJOR underpinning their obvious confident "pipeline-wise". I just wonder if the Govt sector is finally starting to 'happen'. Quite possibly...

...well that and telco/ISPs as resellers | Endace's new mobile security platform | intelligence at the application layer | latency as a service with Correlix | 100Gb/s launch | breaking into the enterprise sector etc etc ;o)

[aspex] 12/10/2011 08:09

Panmure Gordon ups from 543 to 557.
Not much but it all helps.

[mikepompeyfan] 11/10/2011 22:16

Just out of curiosity Knackers are you aware of the product below ? The reason l'm asking is because l hold shares in agl, who in turn hold 30% of Geomerics who in turn hold a stake in Hyperglance. Are you able to say if Hyperglance looks like something that might be in demand or is it not your area of expertise ?