Microsoft Warily Eyes Antivirus Market

Ever since Microsoft(MSFT) acquired an antivirus company nearly a year ago, analysts have been casting the software behemoth as a dark cloud threatening to rain on the booming sector's parade.

Microsoft did little to allay worries of a coming storm in the antivirus field at a presentation in Silicon Valley Thursday afternoon. Rich Kaplan, corporate vice president of security business and technology marketing, said Microsoft remains on the fence about its plans for the technology it acquired with the purchase of Bucharest, Romania-based antivirus maker GeCAD Software last June.

"We haven't decided yet how and if we will integrate that technology," Kaplan told a group of roughly 100 people at a presentation on Microsoft's security. In the near term, Microsoft is focused on partnering with other antivirus vendors, including Computer Associates(CA), to improve security in the release of its Windows Service Pack 2 this summer.

Earlier this week, though, Microsoft announced a partnership with Hewlett-Packard(HPQ), the second-largest server vendor, to bundle its firewall and virtual private network. That move encroaches on the domain of Check Point Software (CHKP) and SonicWall (SNWL), and could bode ill for other security vendors if Microsoft duplicates that model in the antivirus field.

Microsoft's entrance into the antivirus market would pose the greatest threat to companies like Symantec (SYMC) and Network Associates (NET). Symantec, in particular, has enjoyed quarter after quarter of stronger-than-expected results as a result of its seemingly unstoppable consumer antivirus business, and its stock has doubled in the past year.

Shares of Network Associates, which has been grappling with financial restatements and problems in its corporate security business, have still outperformed the Nasdaq Composite in the past year, climbing 36% compared to a 31% increase in the Nasdaq.

Shares of Symantec were recently off 32 cents, or 0.7%, while Network Associates was up 9 cents, or 0.5%, at $16.62. Microsoft was down 3 cents, or 0.1%, to $26.16.