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If Anyone Knows How to Make Money It's This Hot Tech IPO

You can't see them… but they're there – waiting to steal key data from your mobile phone or tablet.

It's a world where hackers and thieves will do anything to get access to your bank account, social security number, home address, lists of contacts and other secret data.

And the truth is every time you head onto the Internet you are vulnerable-especially when using a mobile device.

That's why I have my eye on a small, fast-growing tech leader that is about to capitalize on the security threats that are targeting the huge increase in mobile commerce.

Because if anyone knows how to make money in mobile security it's the leaders of AVAST Software.

Based in Europe, AVAST now protects about 160 million mobile phone users against viruses, malware, hackers and other cyber thieves. With clients in nearly every single country in the world, AVAST is the leader in this growing sector.

In fact, in just the last 30 days alone, AVAST says it has blocked 118 million wireless attempts to access infected Websites.

Now you know why so many tech observers have their eyes on AVAST's upcoming IPO….

Unlocking the Value Of the AVAST IPO

The firm expects to go public tomorrow morning on the Nasdaq, priced between $9 and $11 a share under the ticker AVST. At the midpoint of the pricing range, that would give AVAST a market cap of about $850 million.

But here's what I like about AVAST: It has an ingenious way to attract its clients. It employs the "freemium" business model. Using free offers it captures millions of users and converts them to high-margin paid products.

So far, this "freemium" approach has worked like a charm. Over the last six quarters, AVAST has had an average operating profit margin of 37.5%.

For Avast, this much is clear — the company has found a niche with a lot of room for more growth.

Indeed, the rise of smartphones has made mobile shopping, banking and Web searches one of the major tech trends of the last five years.

Consider that more than 1.2 billion people around the world already use their smartphones to access the wireless Web. In the U.S. alone, one in four people logging on to a Website do so from mobile devices only, according to the trade journal Digital Buzz.

And these monumental trends show no signs of slowing down any time soon.

In fact, today many small shops actually use their smartphones as digital cash registers since they can now also use them to accept credit cards. To begin accepting credit cards, merchants simply take a small device that can decode magnetic stripes and plug it into their smartphones.

This trend is sweeping the world for a simple reason…

What used to take weeks of paper work with banks and required a special machine happens in just a few easy steps. That's why barber shops, street vendors and cafes that used to work only with cash or checks now accept credit cards.

Not only that, we're still in the very early stages of a broad sector known as mobile wallets. This tech allows you to tap into near-field communications gear to buy goods or services.

Simply stated, the merchant would have a device that reads your mobile phone for payment. There is no need to even get your wallet out of your pocket or purse.

Foiling Hacker Hot Spots

But AVAST has one other potential danger to use as a big sales tool — Wi-Fi hotspots.

Located all over the world, these hotspots allow users with smartphones or tablets to log onto a broadband wireless network.

Many are not only free, but also open to the public. Or else they have password protection that is primitive at best.

However, as any cybersecurity expert will tell you, hackers love these hotspots. They draw dozens, sometimes hundreds, of users a day. Hackers tap into these zones the way sharks use a hiding place, they just wait for all the fish to swim to them.

For its part, AVAST also sells to home and company users. But mobile remains its big hook.

Of course, such a large and fertile market draws other entries. AVAST competes with another tech firm that went public earlier this year called AVG Technologies NV (NYSE: AVG).

Shares of AVG basically broke even on their first day of trading last February. At one point, the stock had later gained about 15%.

Since that time, AVG has sold off. It is now down about 22% year-to-date. That often happens with IPOs — many run up for a short time only to give back all those gains or more.

Of course, in this choppy, news-driven market, it's difficult to predict how much success the AVAST IPO will enjoy. Overall, tech stocks are getting slammed these days.

But last week we did see two successful tech IPOs. Shares of Palo Alto Networks Inc. (NASDAQ: PANW) soared 33% from its offering price, while Kayak Software Corp. (NASDAQ: KYAK) rose 26% on its first day of trading.

Remember, a disciplined investor never puts in a market order for an IPO. Doing so leaves you open to getting killed if the stock opens with a frenzy but fades later in the day.

Pick a price that makes sense to you and use that as your limit order. If it doesn't fill, just forget about it and move on. Because the one thing that's true about high tech, there will always be another hot IPO.

Even still, this is one IPO I'm definitely going to have my eye on. AVAST debuts tomorrow.

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About the Author

Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.

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  1. clarens severe | July 25, 2012

    i would like to participate in the ipo, i can't qualify so how can i be qualify

    • clarens severe | July 25, 2012

      i would like to participate in the ipo coming, i tried i am not qualify can you make me qualify

  2. db | July 26, 2012


    Chill out, the IPO was postponed citing "market reasons".

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