Shares of

RSA Security


climbed Tuesday after the authentication software company announced key deals with


(MSFT) - Get Report


Shares of RSA rose 54 cents, or 21%, to $3.11 in recent trading. The stock was the third-highest gainer by percentage Tuesday, according to Instinet.

Under an agreement with Microsoft, RSA has developed the RSA SecurID software token for the software giant's Windows Pocket PC software platform. That will allow customers to use their Pocket PC-powered devices to obtain authentication information from RSA, thus eliminating the need to carry separate hardware tokens.

RSA also has given Microsoft a license for a component of its authentication software, which will allow Microsoft to integrate it into Microsoft applications. The first Microsoft product to use the RSA technology will be its Internet Security and Acceleration Server 2000, an enterprise firewall and Web cache server.

Wedbush Morgan Securities analyst Tim Leehealey said he doesn't expect the agreement to have a significant impact on RSA revenue in the short term. But he does expect it to bring in new business, because it will be easier for RSA to upsell authentication products, since they already will be integrated into Microsoft software.

"While no financial arrangements were disclosed, we believe the Microsoft agreement shows that the company is taking the right steps to restore growth to its core authentication business," Leehealey said in a note Monday. He has a hold rating on the stock, and his firm hasn't done any banking with RSA.

"What I think is positive about it is it's just a nice proof point of execution for a company that is essentially way out of favor with the market," Leehealey added in a phone interview. An ongoing investigation by the

Securities and Exchange Commission

, and more recently the possibility of the SEC commencing a

civil injunctive proceeding possibly involving stock trading and revenue recognition, have been hanging over the company. "That is what the value of the company hinges on," Leehealey said.