AVG CEO Eyes Mobile Lockdown
NEW YORK (
) -Security specialist
AVG Technologies
(AVG)
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
clean for Android and Windows Phone 7," he said, in an interview. The CEO believes that customers need education on protecting their smartphones and tablets, with many consumers not realizing the
the devices pose.
|
"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.
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--
Written by Chris Ciaccia in New York
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