Check Point's Q4 profit tops estimates

Reuters News
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Posted: Jan 17, 2012 12:24 PM
Check Point's Q4 profit tops estimates

By Tova Cohen

TEL AVIV (Reuters) - Internet and network security provider Check Point Software Technologies beat forecasts with a jump in fourth-quarter profit and forecast growth in 2012 in line with analysts' estimates.

Its shares were up 6.1 percent at $54.00 on Nasdaq on Tuesday.

Chairman and Chief Executive Gil Shwed said there were many reasons to believe that awareness among enterprises of the need for network security would continue to grow.

"But we can't forget there are unfavourable economic factors," Shwed told a news conference. "We expect to see similar growth rates to what we forecast last year."

Israel-based Check Point said it continues to take market share from competitors such as Cisco Systems and is expanding its addressable market.

The company's software blades architecture -- independent, modular software building blocks that prevent network intrusion and are bought on an annual subscription basis -- is selling strongly and boosting deferred revenue growth, he said.

Check Point also launched new appliances, which combine hardware and software, that have been well received in the market, he added.

"As cyber-attacks and security risks reach new levels of sophistication, customer expectations for their security infrastructure also increase," Shwed said.

Check Point has high hopes for its anti-bot software blade, which it plans to launch in early 2012. Bots are hard-to-detect pieces of software that invade networks.

CYBER WARFARE

Shwed said most of the cyber attacks experienced in Israel in recent days have been from bots. Check Point's new technology will help prevent such attacks.

Hackers disrupted online access to the Tel Aviv Stock Exchange, El Al Airlines and three banks on Monday, just days after an unidentified hacker proclaiming Palestinian sympathies posted the details of thousands of Israeli credit card holders on the Internet. [ID:nL6E8CG26X]

"What happened yesterday was an attack by thousands of computers around the world, some even in Israel," Shwed said, explaining that hackers from abroad manipulated computers in Israel without their users' knowledge by using bots.

Armed with nearly $2.9 billion in cash, Check Point is continuing to buy back shares and look for acquisitions.

"The Check Point story remains on very solid ground, and we believe its high-end appliances could become a growth driver in 2012 and beyond," Oppenheimer analyst Shaul Eyal said.

The company posted fourth-quarter earnings per diluted share of 84 cents, up from 73 cents a year earlier. Buoyed by gains across all key business activities, revenue rose 12 percent to a record $356.8 million.

Check Point had been forecast to earn 82 cents a share on revenue of $355.6 million, according to Thomson Reuters I/B/E/S.

"Significant strength in deferred revenue should more than quell any concern investors have over only $1 million in upside to street consensus," Citi analyst Walter Pritchard said in a note to clients.

For the first quarter Shwed forecast revenue of $305-$315 million and earnings per share before one-off items of 69-73 cents. The company is forecast by analysts to earn 72 cents on revenue of $313.6 million.

For all of 2012 he sees revenue of $1.345-$1.395 billion and EPS ex-items of $3.10-$3.20. It is forecast to post revenue of $1.381 billion and adjusted EPS of $3.16.

(Additional reporting by Steven Scheer)