Computer Security Firm’s Stock Is Click and Miss

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Cyber Monday was a big day for CyberDefender Corp., the downtown L.A. provider of security software and call-in tech support. The company reported its highest single-day sales on that day.

But since then, its stock has tumbled, hitting an all-time low the following week. Why? CyberDefender missed the deadline to file its third quarter financials. Then the company was the subject of a scathing article on a muckraking blog, where it was accused of cooking its books and selling shoddy software. The company dismissed the allegations as coming from an unreliable source.

James Ragan, an analyst with downtown L.A. broker Crowell Weedon & Co., attributed the decline to the company’s Nasdaq filing problem, which was reported in late November. But he also said the article on TheStreetSweeper.org may have sapped investor confidence.

CyberDefender, which was founded in 2003, once focused almost exclusively on antivirus and antispyware software. But the company has recently ramped up its business that sells call-in tech support to customers. It expanded its downtown headquarters this summer by 17,000 square feet to accommodate up to 500 new call center employees.

Although CyberDefender is not profitable, it has recorded 11 straight quarters of revenue growth.

On Nov. 29, CyberDefender reported its highest sales day ever. That was Cyber Monday, the day after the Thanksgiving weekend, known as the busiest day of the year for online retailing. But on Dec. 8, shares fell to $1.88, the lowest since the company began trading on the Nasdaq on June 9. Shares jumped back up 44 percent the next day when the company announced the filings would be in by the end of the year.

CyberDefender didn’t meet the deadline for its third quarter filing because it recently hired a new auditing company that made adjustments to noncash elements of its past regulatory filings. Kevin Harris, the company’s chief financial officer, said he plans to restate several filings before the end of the year, well within the 180-day deadline that Nasdaq has given for compliance.

“We’ll have all of our filings up to date by the end of the year,” said Harris, who added that the adjustments will be inconsequential.

CyberDefender Chief Executive Gary Guseinov declined to comment on the article on TheStreetSweeper, dismissing it as an unreliable source.

Ragan remains bullish on CyberDefender and has kept his “buy” rating.

“It’s an emerging company that’s still proving its business model,” he said. “When the financials get restated and they get current again, that will be positive for them.”

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