SmartMoney
On the Street by Joan R. Magee
Could a Cyberattack Hit Stocks You Own?
Last week, Intel (INTC1) revealed in an SEC filing that its networks had been the cyber victim of “sophisticated attacks,” turning
the chip maker into the latest casualty of computer hacking. The disclosure, in a 10-K filing, was briefly worded and Intel declined
to elaborate further. The timing of the attack — between January and February -- coincided with the highly-publicized security
breach reported by
Google (GOOG2).
Alarm over hacking is of course growing, as are the security and financial implications. All 2,100 businesses and agencies
surveyed by software security firm Symantec in January said they had suffered a security breach, and 75% said they'd been
victims of a cyber attack in the past year. Slightly more than a third of the organizations rated the breaches as either “somewhat” or
“highly effective.” After retailer
TJX (TJX3) revealed in January 2007 that it had lost the credit- and debit-card information of more than
40 million consumers to hackers, it was hit by a wave of lawsuits, which cost it $40-plus million to settle.
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How online security issues affected five companies. 5
Typically, companies report security breaches only when required to by law, unless they calculate it is worth their while. Contrast
Intel’s tight-lipped revelation with Google’s very public airing of its charges against China. In that case, Google made headlines
accusing the Chinese of trying to censor search results. Positioning itself as blazing a trail, the search giant touted freedom of
speech, human rights implications and broad security issues. It threatened to withdraw from the Chinese market, even though the
company had complied with Beijing’s censorship measures since it entered the Chinese market in 2006. At least for now,
Google.cn is still up and running.
So, what should an investor be worried about in the case of a cyber attack? Probably the main issue is reputation. Revealing a
security breach can give a company a “black eye,