Shares in antivirus firm Gen Digital, which was created a year ago by the merger of Czech Avast and US NortonLifeLock, have lost nearly a fifth of their value on the stock market in the period. Analysts polled by CTK said. They said the merger was aimed at accelerating the company’s transformation towards cybersecurity for ordinary users, strengthening its presence in various countries, expanding its product portfolio and saving costs.
“However, the newly formed company has not fared well over the past 12 months, losing about a fifth of its value on the stock market. Currently, Gen Digital shares are even trading very close to their yearly low,” Purple Trading analyst Petr Lajsek told ČTK. Technology companies have had a relatively good year. The US technology index Nasdaq Composite has added nearly 30 percent over the same period.
Gen Digital – Columbia University lawsuit
As the analyst pointed out, the biggest threat to the company now is a lawsuit with Columbia University over patent infringement. The latter is a legacy from before the two companies merged. The dispute has been going on since 2013, when two Columbia University professors accused the company of infringing their patents while developing antivirus programs. Last year, the court awarded the university $185 million in damages. Last month, however, it decided to increase the amount to $481 million plus attorneys’ fees. “This could put a big hole in the finances of Gen Digital, which has already seen its debt increase significantly in connection with the Avast acquisition,” he said.
Meanwhile, the company has been able to accelerate growth in recent years, Port analyst Marek Malina pointed out. At the time of the merger with Avast, the company was growing at 12 percent year-on-year, which has now tripled. Gen Digital is also benefiting from rising spending on cybersecurity, he said. “But investors are not yet convinced by these numbers either. The company has a chance to convince investors that they are wrong on November 7, when Gen Digital reports results for the quarter ending September 30,” he added.
Radim Dohnal, an analyst at Capitalinked.com, reminded that Avast shares were among the top five issues in Prague. Its share of trading in Prague grew gradually from 1 percent to 14 percent and by the end it was the fourth or third most traded. “Its departure did a lot of damage to the Prague Stock Exchange. The trend of the Prague Stock Exchange being an e-shop for Czech billionaires or foreign investors continues,” he said.
Gen Digital capped its latest fiscal year ending in March with a net profit growth of more than 61 percent to $1.35 billion. The company has about 500 million customers in 150 countries, more than a year after the merger of Czech Avast and U.S. NortonLifeLock, it said on its website. Gen’s portfolio includes the Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner brands. The company provides cybersecurity, privacy and identity protection products and services to approximately 500 million users in about 150 countries.