Last year, The Globe 100 survey picked out RSA Security (then called Security Dynamics Technologies) as a ''growth gazelle.''
Arthur coviello, RSA Security's CEO, says his company's future is in business-to-business electronic commerce, for which security needs are high. That's because the transactions can be worth millions. (Globe Staff Photo / Tom Landers)
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The Bedford company certainly lived up to that billing, although for unusual reasons, as it literally earned its way to third place in this year's ranking of Massachusetts' most successful publicly traded companies.
Founded in 1984 to develop and sell authentication devices that block unauthorized users from computer systems, the company renamed itself in September. The new name, RSA Security, comes from a former competitor, acquired in 1996, which had a stronger brand.
That acquisition also set the stage for last year's phenomenal financial performance. Along with it came a stake in an Internet privacy-protection start-up, VeriSign Inc., of Mountain View, Calif., which subsequently has become a powerhouse.
Last year, RSA Security's management cashed in on some of that good fortune, selling shares in VeriSign that added $284.6 million to the company's coffers, before taxes. This one-time gain was nearly 16 times greater than operating income, and pushed RSA Security's profit margin up by a whopping 391 percent for the year.
Not that operating results were weak.
Last year's revenues of $218.1 million were up 27.3 percent from 1998, and earnings, at $18.1 million, were up 41.7 percent.
Nearly 90 percent of RSA Security's 1999 sales were from its authentication product, SecureID, and its encryption software, BSafe, which guards against prying eyes seeing credit-card information and other confidential data sent over the Internet.
Arthur Coviello, RSA Security's president and chief executive, sees his company's future expanding in business-to-business electronic commerce, for which security needs are high when deals can run into millions of dollars. To serve that market, RSA Security introduced its third major product, RSA Keon, a tool to protect transmissions throughout their cyberspace journey, assuring the transaction is authentic and legally binding.
There's more to come, too, Coviello said. That sale of VeriSign stock has bankrolled a $100 million venture capital fund that RSA Security will use to finance acquisitions and growth.
''We've got tremendous amounts of capital,'' Coviello said. ''We are not standing pat on anything we are doing. We want to be aggressive. We are continuing to develop our products, but we are also leaving no stone unturned to find new technologies and companies to add to what we are doing.''
RSA Security had a brush with the problems it is out to stop this spring, when a hacker attack redirected Internet traffic meant for the company's Web site to a hoax address. Coviello downplays the significance of that attack. ''In no way did anyone get at or into the company's Web site,'' he said.
Coviello also said such attacks help prove the need for RSA Security's services. ''We're in the business of solving those problems,'' he said, ''making it safe for people to do business online, and allowing them to do it with confidence.''
JERRY ACKERMAN