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Tuesday, Oct 4, 2022
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Software Security Company in the Danger Zone?

From bad to worse. That’s been the trajectory of downtown L.A.-based CyberDefender Corp.’s stock price, which had been steadily losing ground since late last year but has plunged dramatically in the past few weeks.

The computer security software company, which added live technical support to its repertoire about a year ago, was last week’s biggest loser on the LABJ Stock Index, having fallen to 89 cents July 20. (See page 38.) That’s down 20 percent from the previous week, and 46 percent from a month ago.

If the stock price stays lower than $1 for 30 days, Nasdaq could start the delisting procedure.

Marie Clark, CyberDefender’s director of corporate communications, said the company was in a quiet period pending an earnings report the first week of August. CyberDefender stock has been stuck in a downward trend since late 2010, when the company missed the deadline for its third quarter filing. The stock plunged at that point, briefly recovered but then has slid steadily since.

The blown deadline was the result of the company switching auditors and restating earnings from several quarters. The company had been deferring some expenses, and stopped doing so.

A critical blogger then attacked the company’s previous accounting practices. CyberDefender officials dismissed the questions, but other problems have arisen since.

In May, three customers filed a class-action lawsuit against the company, alleging CyberDefender’s software was ineffective, that its marketing was misleading and that the company had not provided full rebates to dissatisfied customers. CyberDefender and the customers are waiting for a settlement approval, Clark said.

CyberDefender also has to deal with stiff competition in both the software and tech-support sectors.

On the software side, companies such as Mountain View-based Symantec Corp. and McAfee Inc. in Santa Clara have the upper hand because their software comes preinstalled on many computers, said Kurt Scherf, vice president and principal analyst for Parks Associates in Dallas.

On the tech-support side, Scherf said there’s just as much competition, including Best Buy Co. Inc.’s Geek Squad and a new service called Xfinity Signature Support from Comcast Corp.

“There are so many well-known brands out there,” Scherf said. “It leads me to wonder if consumers are seeing something from CyberDefender, comparing it to one of those blue-chip brands and saying, ‘If I’m going to do this, I’m going to go with a brand I know.’”

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