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General Electric Company’s Greatest Hope Could Be Its Greatest Threat (GE)

GE stock could be at risk, as its vaunted Internet of Things is already attacking

By Dana Blankenhorn, InvestorPlace Contributor

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There may be no more exciting prospect for technology investors today than the Internet of Things. And no company is as heavily invested in it as General Electric Company (NYSE:GE) (and by extension of this, GE stock is also heavily influenced by its success).

GE Stock: Is General Electric's Greatest Hope Its Biggest Threat?In this new world, security is a big topic of discussion, so GE, along with rivals like Cisco Systems, Inc. (NASDAQ:CSCO), grandly released an Industrial Internet Security Framework Technical Report last week that aims to define terms. Computerworld writes that the group is “inching toward security”.

But while the cops are talking in their industrial station house, an insecure Internet of Things already exists, and it’s causing havoc. This is something that GE stock owners and investors in Internet of Things based companies should not overlook.

Internet of Things: The Danger Is Real, Not Theoretical

You have insecure IoT equipment in your home right now. If you have an Internet-connected security camera, a Digital Video Recorder, or even a router running a WiFi network in your home, that’s an Internet thing, and it likely has no security on it.

Because your cameras and routers have no security, hackers can easily take them over and use them against other Internet things, or people. They already have.

A network of compromised routers, DVRs and cameras last week took down the site of security researcher Brian Krebs with a record-setting Distributed Denial of Service (DDoS) attack. The attack was so large that Akamai Technologies, Inc. (NASDAQ:AKAM) was moved to dismiss Krebs as a customer. Krebs is back online with help from Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL).

Krebs believes the attack came from two teenagers who created an “attack for hire” system and were arrested recently. The motive would have been revenge against a journalist who identified them. Their system used readily available malware that infiltrated the devices and attacked when called upon by a central server.

But as security legend Bruce Schneier writes, if a couple of kids could create the world’s largest DDoS attack and, in effect, censor the internet, nation states can take down the entire internet using similar techniques. The key is the insecurity of the existing Internet of Things.

The Industrial Internet Consortium says it will not set standards for security industrial Internet devices, but try to work with existing standards. Confidentiality, integrity and availability are being written about as goals for the consortium to work on together.

Security experts, however, are raising an alarm, noting that systems based on the idea that only authorized personnel will use them become highly vulnerable to hackers who simply spoof that identity.

GE is predicting $4.5 trillion will be invested in connected Internet devices, running factories and installed on important products, over the next five years, admitting that security creates additional attack vectors for hackers. But so far they’re only building models for what cyber security in this new age will look like.

Although the prospects for GE stock are sound, given the potential threats, investors need to look at the bigger picture.

The Future Is on Hold for GE Stock

What the Krebs attack, and incidents like it, demonstrate is that the Internet of Things already exists, that it’s woefully insecure and that the future may need to be put on hold while it’s made secure.

General Electric (and, consequently, GE stock) is not the only company affected by this. Companies invested in IoT chips like Intel Corporation (NASDAQ:INTC) are raising the alarm, even while International Business Machines Corp. (NYSE:IBM) delivers enabling technology.

The bright future futurists promise needs to be delayed while security issues are dealt with.

Dana Blankenhorn is a financial journalist who dabbles in fiction, his latest being The Reluctant Detective Travels in Time. Write him at [email protected] or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in GE and INTC.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/general-electric-ge-stock-greatest-hope-threat/.

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