Check Point Gets by Q1

Security software firm hits Q1 EPS numbers, but it comes in a little light on revenue

April 18, 2005

2 Min Read
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Check Point Software Technologies Ltd. (Nasdaq: CHKP) today posted earnings per share of 29 cents for the first quarter, compared to 16 cents in the first quarter of 2004, in line with analysts expectations. Net Income was $73.7 million, an increase of 76 percent from the same period last year.

On the downside, the company slightly missed revenue expectations, reporting revenue of $137.7 million, up 19 percent on the same period last year but a shade below analysts’ estimates of $138.86 million.

In morning trading, Check Point shares traded down $0.26 (1.19%) to $21.54 on the news.

Execs on this morning’s conference call said the addition of software-based SSL VPN products to the firm’s existing hardware helped results (see Check Point Unveils Connectra 2.0).

Gil Shwed, Check Point’s CEO, also gave a peek into the company’s future roadmap. The exec confirmed that a new, enhanced, enterprise version of Check Point’s flagship VPN-1 firewall/VPN is in the pipeline. “We expect the next major version of VPN-1 Pro to come pretty soon,” he said. “Definitely in the next two quarters... Our sales force has already started training on the new version."Although he did not divulge any of the new product’s features, Shwed promised that existing VPN-1 customers with valid subscriptions will be able to upgrade to the new version free of charge. Shwed also admitted that some customers may have delayed their buying decisions this quarter, to the detriment of Check Point's firewall/VPN revenues. “It’s possible, but I don’t want to speculate too much on that,” he said.

Check Point’s management team did confirm that the company is suffering from some softness in the Asian market. Asia contributed just 14 percent of revenues, compared to North America’s 44 percent and Europe’s 42 percent.

”Japan and China were not as strong as we had hoped for,” admitted Jerry Ungerman, Check Point’s vice chairman, although he said that the company is doing some internal restructuring to resolve the problem. This involves expanding the company’s management team in the region, he added.

Check Point is not the only vendor suffering from this problem. Last week IBM Corp. (NYSE: IBM) partly attributed its current financial woes to softness in certain geographies and only managed to increase its Asian revenues by 1 percent (see IBM Reports Q1 Results).

But Shwed said that, for Check Point, it is a very different story in Europe. “The strength of the euro over the last year is clearly helping European customers by giving them more buying power."— James Rogers, Site Editor, Next-Gen Data Center Forum

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