is teaming up with
to offer antivirus software free to consumers for a year, a move that could hurt competitors
The news pushed shares of Symantec down $4.16, or 6.3%, to $61.90 in recent trading Tuesday, and shares of Network Associates down 49 cents, or 3.6%, to $13.29. Computer Associates climbed a penny, or 0.04%, to $22.57, while Microsoft gained 30 cents, or 1.9%, to $25.45.
Islandia, N.Y.-based Computer Associates, which until now has sold infrastructure software to large enterprises, announced at computer confab Comdex that it would offer a free one-year subscription to its eTrust EZ Armor antivirus and firewall desktop security suite through both its own and Microsoft's Web site. It is CA's first move into the consumer space, a field in which Symantec has been the leader and has enjoyed stellar success during a recent string of virus outbreaks.
Network Associates, which has a stronger corporate presence, also sells to consumers through its McAfee brand.
CA's move "ends the honeymoon the
Symantec stock has enjoyed after the Blaster and Sobig viruses," U.S. Piper Jaffray analyst Gene Munster said Tuesday, referring to two viruses that disrupted computer networks this summer. "Now they
Symantec have to deal with this bump in the road."
The big question, Munster said, is how Microsoft will market the CA antivirus product. In a press release, CA said it will "aggressively promote" the offer as part of Microsoft's "Protect Your PC" campaign, an effort by Microsoft to help consumers reduce the threat of malicious computer attacks. But if that means Microsoft markets the CA product similar to the way it has handled its XP firewall, it will be only a "mild negative" for Symantec's business, Munster said.
Alternatively, if all the companies plan to do is include links to a download on their Web sites, there's little reason for concern, said Legg Mason analyst Todd Weller. The way to gain market share in the consumer antivirus market is through deals with computer manufacturers and retail outlets, Weller noted.
"We do not believe that CA has a good presence in either of these channels when compared to either SYMC or NET," he wrote in a note Tuesday. Weller has a buy rating on Symantec, a hold on Network Associates and his firm hasn't done banking with either company.
Longer term, however, Munster expects Microsoft to offer its own antivirus solution and views the CA partnership as just a stop-gap measure until that time. But he wouldn't expect Microsoft's own solution until the second half of next year because the promotion with Computer Associates will last through June 30, 2004.
Speculation has swirled over Microsoft jumping into the field since June, when the software behemoth acquired
, a Romanian maker of antivirus software.
Munster has an outperform rating on Microsoft and market perform ratings on Symantec and Network Associates, and his firm has done banking business with Microsoft and Network Associates. He doesn't cover Computer Associates.