Check Point Snaps Up Sourcefire

Clinches deal for open source IPS specialist, but says Q3 results will be at low end of guidance

October 7, 2005

3 Min Read
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Check Point Software Technologies Ltd. (Nasdaq: CHKP) has stumped up $225 million for privately held intrusion prevention specialist Sourcefire Inc. And even as Check Point's execs voiced expectations of a 2006 revenue boost from the buy, the company's stock took a hammering, as the firm adjusted its third-quarter revenue forecast.

Speaking on a conference call this morning, Gil Shwed, Check Points CEO, blamed “a relatively slow summer around the world” for lowering Check Point's quarterly expectations from a range of $140-150 million to a range of $140-141.5 million. He added that a few large deals expected to close in the quarter are now expected to close in the fourth quarter.

Check Point shares dropped $2.25 (9.49 percent) today to $21.45.

The vendor, however, is looking to open source security specialist Sourcefire to bolster its future revenues. On today’s call, Check Point execs said they expect a revenue hike of between 6 and 8 percent next year thanks to the deal.

Sourcefire was founded in 2001 by Martin Roesch, leading developer of an open source intrusion technology called Snort, which forms the basis of the firm’s Intrusion Sensor products, an appliance series that analyzes network traffic. Roesch is Sourcefire's CTO.Part of Sourcefire's attraction is its roots in open source technology. Increasingly, vendors in a wide range of technology areas are using the open source model as way to get their foot in the door of enterprise data centers. (See Grid Goes Open Source, Sun Hits the Source, and Opening Up the Data Center.) With Snort downloaded by two million users, Check Point is now looking to tap into this user base.

The deal also reflects a growing emphasis on internal network security. Over recent years many users have strengthened the edges of their networks with perimeter technologies such as firewalls. Now, there is an emphasis on checking traffic within enterprise data centers. (See ConSentry Locks Down LANs and Security Spending Shoots Up.)

Shwed said the two firms’ product lines will remain in the marketplace, although there will also be combined offerings. This, for example, could involve Check Point putting its FireWall-1 and VPN-1 software on Sourcefire’s IS5800 IPS device, he said.

Shwed also highlighted the “synergy” between Check Point’s InterSpect product and Sourcefire’s Real Time Network Awareness (RNA) sensor appliance, which monitors data center devices and PCs. “We’re going to see more and more integration between these products. In the next year or two, hopefully we will see that all the technologies are available on all the Check Point product lines and vice versa. ”

The exec also said that Check Point intends to keep the core Snort technology available as an open source offering.Check Point has at least been down this road before, coughing up $205 million for security endpoint firm Zone Labs in 2003. (See Check Point Buys Zone Labs.) “I think we have learned a lot of integration lessons [from the Zone Labs deal] and should implement them over the coming months,” says Shwed.

The CEO expects Sourcefire’s 140-strong workforce to come over to Check Point, along with the startup’s management team.

The deal, which has already been approved by Sourcefire’s shareholders, is expected to close in the first quarter of 2006.

— James Rogers, Site Editor, Next-Gen Data Center Forum

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