“What’s the alternative?” SolarWinds increases the results of security companies

OAKLAND, Calif. (Reuters) – Cybersecurity providers, including FireEye Inc. and Microsoft Corp., were unable to prevent a huge network breach reported this month by numerous U.S. agencies and companies, though their actions skyrocketed. second consecutive week.

Months penetration exposed weaknesses in security tools and network management programs, most notably SolarWinds Corp.’s Orion software, which is widely used to monitor networks.

Memories and scandals affecting products such as cars, food and toys tend to hurt the actions of the entire industry as investors prepare for a broad decline in consumer confidence and sales, according to two experts who have studied these scenarios.

But the effect of the cybersecurity scare has been different. Wall Street is betting that governments and businesses, which have invested years in moving to digital infrastructure, will only accelerate purchases of the latest IT tools.

“What’s the alternative?” Said Venkatesh Shankar, a professor of marketing at Texas A&M University.

Lush pillow removals or outbreaks tend to affect the actions of a narrow supply chain, from restaurants and car dealerships to parts and ingredients suppliers, he said.

But “the magnitude of this gap is not just within the software industry,” he said, noting that SolarWinds customers span countless industries.

Kartik Kalaignanam, a professor of marketing at the University of South Carolina, said marketers expect organizations to strengthen their defenses, even if that means buying services from companies that were hacked.

“While it could be argued that each of them has some sort of flaw in their system, there is a feeling that there will be more spending and that the market will increase overall,” Kalaignanam said.

A BlackRock iShares cybersecurity stock fund rose about 10% last week and rose another 3.5% this week entering Thursday. FireEye rose this week to a 5-year high, Microsoft exceeded the 90-day high and Palo Alto Networks, which said it was blocking SolarWinds-related intrusions, jumped to the historic record.

Mark Cash, who analyzes the stock of research firm Morningstar, said SolarWinds’ non-compliance “will certainly benefit” security companies. Once called upon to repair the defenses, they inevitably get a contract to stay, Cash said.

Shankar and Kalaignanam said they expect the stocks of the industry to remain high for about six months to a year.