Microsoft praises software that ‘calls home’ if it is stolen or lost
Gillian Shaw
Sun
John Livingston, CEO of Absolute Software, says the company is ‘the belle of the ball’ and wants to maintain that position. Photograph by : Ian Smith, Vancouver Sun
Shares of Vancouver’s Absolute Software hit a new 52-week high Wednesday after the company announced an expanded contract with Hewlett-Packard for its anti-theft software.
Shares climbed as much as 14 per cent, the biggest gain since February, reaching $31.04 on the Toronto Stock Exchange before dropping back to close at $29.80, up almost 10 per cent from Tuesday’s close.
The rise comes as the software security and services company is riding a wave of popularity — this week alone marked by a feature appearance in a keynote speech by Microsoft chief executive officer Steve Ballmer; by news of the expanded HP contract that could add another five to six million installations of Absolute software; and by TD Newcrest raising its target price for Absolute stock to $35 from $26.
“We are the belle of the ball today, our job is to maintain that,” said John Livingston, chairman and CEO of Absolute, which is about to move its downtown office to larger quarters in the Bentall Four building to keep pace with growth that has seen staff double to 180, up from 90 two years ago.
The stock had risen eightfold in the past year before Wednesday as a rise in data theft and increasingly stringent security and privacy regulations in the U.S. have prompted personal computer makers such as Dell and HP to install Absolute’s Computrace computer tracking software on new computers.
It’s a success that has been 13 years in the making for the homegrown Vancouver technology company, which has seen demand for its security software take off in the past couple of years.
The company was founded by Christian Cotichini and Fraser Cain, who convinced Livingston in 1995 to give up his day job as an instructor in BCIT’s business department to join the company full-time.
“We’re in a very strong position today,” said Livingston.
“We’ve got a very compelling technology for protecting notebook computers and desktop computers and protecting the data on the computer.”
So compelling that Microsoft chose Absolute from among its many software partners to showcase it as an example of a successful software and service company at a conference this week in Denver, leading to speculation that the software giant is interested in acquiring the Vancouver company.
“We really appreciated that and Mr. Ballmer kindly debuted us, showing our testimonial on screen in his keynote presentation yesterday,” Livingston said in an interview Wednesday.
“It was fantastic — there is Balmer giving his keynote speech and I got to see myself up on the big screen in Denver where there were 10,000 people at the event.”
What makes Absolute’s story so compelling (and is pushing it up in analysts’ estimation) is its software-plus-services model, in which its software is embedded in new computers and the company gets additional revenue from a monthly subscription service.
When computers that belong to subscribers to the service are lost or stolen, the minute the computer is hooked up to an online connection, it “calls home,” alerting Absolute to its location.
The company can then work with law-enforcement officials to see it recovered.
Corporate customers can also take advantage of data protection, in which Absolute can remotely wipe sensitive information from the computer.
Livingston said the latest contract announcement pushes to more than 50 million worldwide the number of computers that will have Absolute Software built in with about 40 per cent of that market in North America.
Currently just over four per cent of computer owners with the Absolute software embedded in their machines subscribe to the monthly security service, which averages about $3 a month, but that percentage has more than doubled from two per cent last year.
“As of March 30, we had 1.2 million subscribers under management and that is growing rapidly,” said Livingston.
“The business is in great health and it’s growing.
“We are able to talk to some very exciting world-class companies about how to incorporate theft protection; these are companies that are worth tens of billions of dollars, in some cases hundreds of billions of dollars.”
Asked if Absolute also has suitors lining up to buy not just the software but the entire company, Livingston would only say: “There are many interested, strategically interested parties watching Absolute. There is a lot of interest out there for what we’ve got and what we’re doing.”
ABSOLUTE’S RISE
A year ago, Absolute Software’s share price was $3.37. It traded for more than $30 Wednesday on the TSX, but closed slightly lower.
July 11, ’07: $29.80
July 11, ’06: $3.37
© The Vancouver Sun 2007