NEW YORK ( TheStreet) - Security specialist AVG Technologies (AVG - Get Report) may be in its infancy as a public company, although CEO J.R. Smith believes the company can tap a huge market opportunity in mobile.
The Dutch software specialist, which began trading on the New York Stock Exchange yesterday, expects a major mobile boost, according to Smith.
"We offer products that allow you to sync your phone, back it up, and wipe information
"Mobile devices are vulnerable, especially if you are on the Android platform," Smith said.The Amsterdam-based security firm has 105 million users, only 15 million of whom pay for its service. The company believes that a user who doesn't pay for its software, however, is still very valuable, as AVG makes 34% of its revenues from indirect methods such as advertising and search partnerships. "We're commoditizing the industry pretty aggressively, and companies like Symantec (SYMC - Get Report) and McAfee can't afford to give their product away for free," Smith explained. McAfee is now owned by INTC (INTC - Get Report). Nonetheless, the company's execution is in the spotlight, as profit margins have fallen for the past three quarters, going from 23% in the March quarter to 10% in the most recent September quarter, according to company filings. Smith noted revenue recognition issues from its most recent TuneUp acquisition, as well as IPO costs as being the primary reasons for margins shrinking. These factors may explain why the firm's shares dipped significantly on their first day of trading. AVG priced its IPO at $16 per share yesterday, and closed at $13. The company also decided to take on debt, and pay a $558 million dividend to existing shareholders. Smith said it was an "opportunity to pay back shareholders and eventually use the cash for acquisitions." Shares of AVG were higher Friday, up 0.3% to $13.03. Interested in more on AVG? See TheStreet Ratings' report card for this stock. Check out our new tech blog, Tech Trends.
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