September 22, 2023

Antivirus Makers Work on Software to Catch Malware More Effectively

Consumers and businesses spend billions of dollars every year on antivirus software. But these programs rarely, if ever, block freshly minted computer viruses, experts say, because the virus creators move too quickly. That is prompting start-ups and other companies to get creative about new approaches to computer security.

“The bad guys are always trying to be a step ahead,” said Matthew D. Howard, a venture capitalist at Norwest Venture Partners who previously set up the security strategy at Cisco Systems. “And it doesn’t take a lot to be a step ahead.”

Computer viruses used to be the domain of digital mischief makers. But in the mid-2000s, when criminals discovered that malicious software could be profitable, the number of new viruses began to grow exponentially.

In 2000, there were fewer than a million new strains of malware, most of them the work of amateurs. By 2010, there were 49 million new strains, according to AV-Test, a German research institute that tests antivirus products.

The antivirus industry has grown as well, but experts say it is falling behind. By the time its products are able to block new viruses, it is often too late. The bad guys have already had their fun, siphoning out a company’s trade secrets, erasing data or emptying a consumer’s bank account.

A new study by Imperva, a data security firm in Redwood City, Calif., and students from the Technion-Israel Institute of Technology is the latest confirmation of this. Amichai Shulman, Imperva’s chief technology officer, and a group of researchers collected and analyzed 82 new computer viruses and put them up against more than 40 antivirus products, made by top companies like Microsoft, Symantec, McAfee and Kaspersky Lab. They found that the initial detection rate was less than 5 percent.

On average, it took almost a month for antivirus products to update their detection mechanisms and spot the new viruses. And two of the products with the best detection rates — Avast and Emsisoft — are available free; users are encouraged to pay for additional features. This despite the fact that consumers and businesses spent a combined $7.4 billion on antivirus software last year — nearly half of the $17.7 billion spent on security software in 2011, according to Gartner.

“Existing methodologies we’ve been protecting ourselves with have lost their efficacy,” said Ted Schlein, a security-focused investment partner at Kleiner Perkins Caufield Byers. “This study is just another indicator of that. But the whole concept of detecting what is bad is a broken concept.”

Part of the problem is that antivirus products are inherently reactive. Just as medical researchers have to study a virus before they can create a vaccine, antivirus makers must capture a computer virus, take it apart and identify its “signature” — unique signs in its code — before they can write a program that removes it.

That process can take as little as a few hours or as long as several years. In May, researchers at Kaspersky Lab discovered Flame, a complex piece of malware that had been stealing data from computers for an estimated five years.

Mikko H. Hypponen, chief researcher at F-Secure, called Flame “a spectacular failure” for the antivirus industry. “We really should have been able to do better,” he wrote in an essay for after Flame’s discovery. “But we didn’t. We were out of our league in our own game.”

Symantec and McAfee, which built their businesses on antivirus products, have begun to acknowledge their limitations and to try new approaches. The word “antivirus” does not appear once on their home pages. Symantec rebranded its popular antivirus packages: its consumer product is now called Norton Internet Security, and its corporate offering is now Symantec Endpoint Protection.

“Nobody is saying antivirus is enough,” said Kevin Haley, Symantec’s director of security response. Mr. Haley said Symantec’s antivirus products included a handful of new technologies, like behavior-based blocking, which looks at some 30 characteristics of a file, including when it was created and where else it has been installed, before allowing it to run. “In over two-thirds of cases, malware is detected by one of these other technologies,” he said.

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Profit Slides on Soft Sales, but Cisco Stays Upbeat

SAN FRANCISCO — Cisco Systems managed to encourage investors Wednesday despite sliding quarterly profits and flat revenue growth, prompting a nearly 7 percent run-up in its shares during after-hours trading.

John T. Chambers, chief executive of Cisco, who is trying to restructure and refocus the company after a year of stumbles attributed partly to slow decision-making, has said it would be some time before his efforts produced results.

Cisco has long been considered a bellwether for technology spending, but its internal problems have made it a less reliable stand-in for the broader technology industry. Cisco makes routers and switches used by corporations and government agencies to operate data centers and telecommunications networks.

But spending by the public sector, which makes up a fifth of Cisco’s overall sales, continues to decline. Spending by government agencies, public universities and hospitals fell 4 percent in its fourth quarter, the company said.

Mr. Chambers said, “You are seeing people making tough decisions about what to cut.”

Cisco reported that its net income in the fourth quarter that ended July 30 fell 36.3 percent to $1.2 billion, or 22 cents a share, from $1.9 billion, or 33 cents, in the same quarter a year ago.

The company said revenue climbed 3.3 percent to $11.2 billion, from $10.8 billion.

The adjusted income of 40 cents was slightly above the expectations of Wall Street analysts. They had expected 38 cents a share and revenue of $10.98 billion on that basis, according to a survey of analysts by Thomson Reuters.

The lack of more bad news was enough to buoy the company’s shares. Jason Ader, an analyst with William Blair Company, said that Cisco’s forecast for relatively flat revenue in the first quarter was good news given the convulsions in the stock market recently. It shows some confidence by Cisco in corporate technology spending even as public sector sales are weak.

“People have been looking for stability,” Mr. Ader said. “It was a much more positive call than it has been in a year.”

The gain in Cisco’s shares in after-hours trading on Wednesday made up only part of the more than 40 percent decline over the last 12 months. They rose 93 cents, or 6. 7 percent, to $14.66 in after-hours trading. In regular trading, they fell 33 cents, or 2.3 percent, to close at $13.73.

While Cisco struggled over the last year, smaller rivals like Juniper Networks performed relatively well. More recently, however, Juniper and Brocade Communications Systems, another maker of technology equipment, have warned of slumping demand for their products.

While Cisco’s main primary products faced headwinds, some of its other businesses have showed strong growth in recent quarters. They continued to do so in the fourth quarter with a 32 percent gain in revenue from data center products and 33 percent increase from wireless products.

Mr. Chambers is counting on these newer areas to lift the company as its more mature products retreat or make small gains.

Cisco, based in San Jose, Calif., said it expected operating of 38 cents a share to 41 cents a share in the first quarter, in line with analysts’ expectations.

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Cisco Shuts Down Flip, Its Video Camera Unit

The Flip video camera, conceived by a few entrepreneurs in an office above Gump’s department store in San Francisco, went on sale in 2007, and quickly dominated the camcorder market. The start-up sold two million of the pocket-size, easy-to-use cameras in the first two years. Then, in 2009, the founders cashed out and sold to Cisco Systems, the computer networking giant, for $590 million.

On Tuesday, Cisco announced it was shutting down its Flip video camera division.

Even in the life cycle of the tech world, this is fast.

From the outset, the acquisition was an odd fit for Cisco, which is known for its enterprise networking services. To some analysts, the decision to shutter Flip was an admission by Cisco that it made a mistake.

“Cisco was swayed by the sexiness of selling to the consumer,” said Mo Koyfman, a principal at Spark Capital, a Boston venture capital firm. “They’re not wired to do it themselves, so they do it by acquisition. Flip was one of the most visible targets out there. But it’s really hard to turn an elephant into a horse. Cisco’s an elephant.”

But the rapid rise, and now demise, of Flip is also a vivid illustration of the ferocious metabolism of the consumer marketplace and of the smartphone’s power to destroy other gadgets.

“It was unusually fast,” said Brent Bracelin, an analyst with Pacific Crest Securities. “It’s a testament to the pace of innovation in consumer electronics and smartphone technology. More and more functionality is being integrated into smartphones.”

The rapid innovation of smartphones, he said, is “one of the most disruptive trends we’ve seen.”

As newer and faster technologies beget newer and faster technologies, consumers move on to the next big thing with alacrity. In four years, Flip has gone from start-up, to dominant camcorder maker, to defunct. It took I.B.M. about four years just to reach dominance with its PC in the early 1980s. The iPad is only one year old.

Just as the Flip was reaching its zenith, the smartphone was gaining traction among consumers. With its versatility in recording video and still images, as well as its ability to perform myriad other functions, the smartphone has since proved to be a far more desirable product than a single-function device like the Flip.

At the same time, the smartphone has crushed the market for GPS devices, put a serious dent in the point-and-shoot camera industry and threatens the existence of many other everyday devices — the wristwatch, the alarm clock and the portable music player.

For technology entrepreneurs, the Flip story may be a cautionary tale of another sort. Many entrepreneurs look at Facebook’s ability to rebuff suitors as a inspiration to stay independent. But Flip’s founders were paid more than half a billion dollars for their invention from one of the most deep-pocketed companies in Silicon Valley, offering an alternate lesson in the fine art of cashing out at the right time.

“There are a lot of young entrepreneurs who look at Flip as a huge success, and they should continue to,” said Jonathan Kaplan, a co-founder and former chief executive of the start-up that invented the Flip. “The demise of Flip has nothing to do with how great a product it is. Companies have to make decisions that sometimes people like you and I don’t always understand.”

Cisco said its decision to shut down the Flip division was part of an overall restructuring plan of its consumer business. “We are making key, targeted moves as we align operations in support of our network-centric platform strategy,” said John T. Chambers, Cisco’s chief executive, in a statement.

Cisco had made inroads into the consumer market over the last decade by purchasing Pure Digital Technologies, maker of the Flip, as well as Linksys, the home-network router manufacturer. Mr. Chambers embodied the exuberance for consumer products, saying he owned eight Flip devices.

The company declined to elaborate on its reasons for shutting the Flip division, but it has faced mounting pressure to shore up its profit margins. It remains the top-selling camcorder on Amazon today, and inspired many imitators. Existing camera heavyweights like Sony and Kodak rushed to release their own Flip-like camcorders, trying to chase Flip’s runaway sales.

Still, Flip’s luster began to fade, as a spate of smartphones with built-in cameras and editing applications hit the market. The unit, which sells cameras for $100 to $200, also struggled to match the rich margins of Cisco’s enterprise services, Mr. Bracelin said. In another sign of trouble, Mr. Kaplan, who became Cisco’s general manager of consumer products after Cisco acquired Pure Digital, left the company in February.

Several analysts saw the decision as an inevitable consequence of a mistake.

“I don’t think there’s an analyst on the planet who thought that Flip was a good acquisition,” said Alex Henderson, an analyst with Miller Tabak Company. “Cisco had this idea that they wanted to be in the consumer’s home network, but they had a grand vision that was not grounded in reality.”

Stephen Baker, an analyst with NPD Group, “Cisco was never really committed to the product.”

Although the company never disclosed specific numbers on Flip, analysts estimated it accounted for just a fraction of the Cisco’s overall business. Simon Leopold, an analyst with Morgan, Keegan Company, said Flip probably had about $400 million in annual revenue, compared with roughly $40 billion for Cisco over all.

Cisco said that the changes would result in 550 layoffs and a pretax charge of less than $300 million in the third and fourth quarter of the fiscal year.

Verne G. Kopytoff contributed reporting.

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Small Business Guide: Learn How to Collect From Slow Payers

Exhibit A is Cisco Systems, one of the largest technology companies in the world, which announced last year that it would wait a full 60 days to pay its small-business suppliers — mostly because it had found that that was what other big companies were doing.

So how does a small business get paid in a tough economy without hiring a collections agency or alienating its clients? Better yet, how does it avoid ending up with a stack of unpaid invoices in the first place?

Judging from the experiences of the small-business owners interviewed for this guide, it is part art and part science.

DO YOUR DUE DILIGENCE It used to be that credit reports were expensive and only for big companies with large budgets. Not anymore.

Ron Phelps, commercial credit manager at Boulevard Tire Center, a tire distributor with 26 locations in Florida, pays $99 a month for Pulse, a service offered through Cortera, , an online business credit reporting system, that keeps tabs on his clients. Last December, Cortera’s monitoring system noted that there was a large federal tax lien on one of Mr. Phelps’s clients, a small trucking company. He cut off the company’s credit line.

“That very same day,” he said, “we decided just to make them a cash customer, because we were concerned about their ability to pay.”

Cortera also offers a free service that collects and analyzes payment histories on more than 20 million businesses. Think of it as Yelp for business credit — instead of reviewing restaurants and stores, its community gives feedback on how promptly a company pays.

“We are helping small businesses tell the world that this person is a deadbeat,” said Alex Cote, vice president for marketing for Cortera. (There are other services, including Dun Bradstreet, that will assess the financial strength of a company.)

SET YOUR TERMS (WITH A SMILE) Diane Nicosia manages and coordinates major construction and design projects through her company, D. E. Nicosia Associates, which is based in New Rochelle, N.Y. “I’m in charge of the budget and have to make sure vendors, architects and engineers get paid,” Ms. Nicosia said. “What I’ve learned is that you have to negotiate these days.”

On a recent project involving 45,000 square feet of office space in a Midtown Manhattan office tower, a construction company said it would back out of the deal after it found that it would take 90 days to get paid by Ms. Nicosia’s client, a Fortune 100 financial services and manufacturing firm. Ms. Nicosia met with her client’s senior management and found that the payment timetable was not set in stone; there was room to broker a schedule that could keep the construction company from walking.

“Most people don’t think to challenge the payment schedule,” she said, “but we have to step up as small-business owners and say, ‘This is my living.’ ”

What Ms. Nicosia learned through this negotiation process, which she said was very amicable, was that there are often options: “All they have to do is push a little button that says pay in 10, 30 or 60 days, and that gets your invoice in a queue, so I got my vendor paid faster by working with the right people in the company.”

GET THE PAPERWORK RIGHT Is your invoice perfect? Did you fill out all the forms (even the ones you may not know about)? Companies do not need much of an excuse, if any, to delay your invoice. So make sure not one piece of information is missing.

Do you know whether the invoice needs a purchase order number? Not having this number can leave invoices lingering in accounts-payable purgatory, and it is unlikely that accounts payable will call to tell you.

Is your invoice formatted correctly? Some companies accept invoices only in the form of a PDF. If you are a new vendor, did you fill out a new vendor form? Many companies require these forms to process a first-time payment (but do not always make that known).

KNOW WHEN TO LOSE A CLIENT If customers do fall behind, when do you decide to cut them off? And what do you do if it is a customer you think you cannot afford to lose?

At Boulevard Tire, delinquent accounts are placed in one of two buckets — 30 days overdue and 60 days overdue.

“We look at those lists long and hard and ask ourselves,” Mr. Phelps said, “is this someone I want to immediately put on credit hold? Or is there something salvageable here? Are they a first-time offender?”

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