Is North Korea to Blame for Sony's Cyber Security Breach? - Analyst Blog

Leading electronic products manufacturer, Sony Corporation (SNE) is reportedly contemplating to officially name North Korea as its prime suspect for triggering a massive cyber attack at its corporate network last week. North Korea, however, has denied any involvement in this matter.

What Actually Happened?

On Nov 24, the internal data of the Sony Corporation's American subsidiary, Sony Pictures Entertainment, was hacked and valuable data related to upcoming movies and employees pay were stolen. The data, in particular, comprised five unreleased movies, around 7,000 global employees' paycheck and medical records, and other confidential data.

This resulted in the subsequent blackout of Sony's computer systems for a week. Sony hired the FireEye Inc's Mandiant forensics unit for investigating the probe. Alongside, the U.S. Federal Bureau of Investigation is also scrutinizing the matter.

Why Blame North Korea ?

As per recent data by Reuters, many cybersecurity researchers have technical evidence that the hacking tool used in this attack, which can be considered as one of the biggest corporate hacks, is similar to those used by North Korea for hacking the systems of three major banks and two broadcasters of South Korea in 2013.

Experts have presented a common probable reason to justify this blame on North Korea. As per the buzz, this hack was strategized against the release of the movie The Interview that involves the fictional assassination of the dictator of North Korea – Kim Jong Un. Reportedly, a former top U.S. government expert stated that North Koreans were not pleased with this Hollywood flick, which is set to release this Christmas. Hence, the U.S. government official believes that this circumstantial evidence has led suspicions towards North Korea.

Besides, this is not the only reason for such a serious allegation. As per market reports, a group of unidentified hackers called Guardians of Peace initially took responsibility for the cyber attack and their hacking patterns are believed to bear resemblance to that of the North Korea hackers.

North Korea's Defense View

Despite the allegations, North Korea has defended itself saying that its government dedicatedly follows international rules related to hacking and piracy prohibitions. The officials claimed that North Korea is targeted for this offence, as their dictator is the subject of an upcoming Hollywood movie. They have bluntly denied any involvement in the cyber attack.

Our View

Although many speculations and conjectures have been made, we will have to wait for an official statement from the investigating team of Sony's cyber security breach. Besides, despite the attack, Sony's shares remained unruffled and have gained 2.3% since Nov 24.

Sony currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the electronic equipment industry include Universal Electronics Inc. (UEIC), Skullcandy, Inc. (SKUL) and GoPro, Inc. (GPRO). While Universal Electronics and Skullcandy sport a Zacks Rank #1 (Strong Buy), GoPro carries a Zacks Rank #2 (Buy).