Congress Could Give FireEye, Palo Alto Networks a Big Payday

NEW YORK (TheStreet) -- The cybersecurity bill being debated this week in Congress could lead to a bonanza of new software products from the likes of FireEye (FEYE - Get Report), Proofpoint (PFPT - Get Report) and Palo Alto Networks (PANW - Get Report).

The Cybersecurity Information Sharing Act aims to foster communication between government agencies and private companies about cyberattacks, which are becoming increasingly common and have given rise to a renaissance in the cybersecurity sector. Over the last year, FireEye is up about 25%, Palo Alto Networks has more than doubled in value, and Proofpoint is up more than 80%.

 FEYE data by YCharts 
 PFPT data by YCharts 
 PANW data by YCharts 

But just how this communication would be carried out has already been the subject of intense lobbying, due to the legal issues involved in public-private collaborations and the many opportunities for businesses to win lucrative government contracts.

"These systems are going to need to be developed," said Patrick Eddington, a policy analyst at the libertarian Cato Institute in Washington, D.C. "This is where the private companies would step in in a big way."

Revenues for the cybersecurity majors come primarily from the private sector: Only 10% of Proofpoint's business comes from government, for example. FireEye's portion of public contracts is slightly higher, according to industry analyst Steve Koenig of Wedbush Securities. The company counts 60 governments and military organizations as customers.

The challenge for these sorts of information-sharing platforms is to be able to pass critical attack data along to the agencies and security divisions tasked with responding to them, while still being opaque enough to protect corporate secrets. The technology behind Bitcoin, often referred to as a "proof of work" scheme, is one such model for this kind of semi-permeable information exchange. 

It's also to ensure that companies are collaborating to their mutual benefit rather than learning things about one another that could lend a noncompetitive advantage.

"This is why there are serious antitrust provisions within the bill," Eddington said. All of these requirements will make for complex software and big federal bucks.

Before these systems can be green-lit, however, the bill needs to get cleared for a vote in the Senate, which might not happen.

Sen. Al Franken (D.-Minn.), who stated that the bill was not yet ready for a vote, has released a letter from the Department of Homeland Security that blasted the bill for the damage it would do Americans' privacy.

The bill "could sweep away important privacy protections," said the letter, signed by Homeland Security Deputy Secretary Alejandro N. Mayorkas.

The bill also has received criticism on the grounds that it simply wouldn't be effective.

"Information sharing is not the answer," Cato's Eddington said. "It's more about cracking down on the agencies that are engaged in bad security practices."

By Tobias Burns

Source: http://www.thestreet.com/story/13243455/1/congress-could-give-fireeye-palo-alto-networks-a-big-payday.html