Kudelski Sees More Demand for Security After NSA Spying Programs

Kudelski SA (KUD), a Swiss digital security company, said it’s accelerating investment in its cybersecurity unit as demand climbed after recent revelations about government surveillance.

“We see a very high demand,” Chief Executive Officer Andre Kudelski said in a phone interview. “The revelations have just woken people up that there is vulnerability. If some elements can be done by governments, you can imagine that pirates can also do things. That’s the way people are starting to think. That is not science fiction, it’s just reality.”

Kudelski Security, introduced in November 2012, helps companies protect data and limit piracy risks. The offering has made faster progress than expected, so more investment was pumped into it in the six months to June 30, and accelerated investment will continue in this half, the CEO said. Global spending on cybersecurity is set to rise about 10 percent to $46 billion by the end of this year, according to ABI Research, a London-based market intelligence firm.

The U.S. National Security Agency has been covertly collecting electronic records on millions of Americans and storing the information in a searchable database, according to information revealed in June by former NSA contractor Edward Snowden. European Union regulators are now probing possible violations of the bloc’s data protection rules because of large-scale surveillance by U.S. spy programs.

The company hired 106 people in the first half, primarily in the cybersecurity business, and this unit remains a priority for future growth, Kudelski said.

Kudelski, which also makes secure systems for products ranging from digital television to electronic voting and smartcards, today reported a first-half operating profit of 16.9 million Swiss francs ($18.4 million), compared with a 2.5 million-franc operating loss a year earlier.

The shares fell 2.4 percent to 12.4 francs as of 5:25 p.m. in Zurich trading, paring their advance to 30 percent this year and giving the company a market value of 667 million francs.

To contact the reporter on this story: Eshe Nelson in London at enelson32@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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