Check Point delivered better-than-expected second-quarter results.
While the third-quarter revenue guidance was unexciting, we expect
Check Point's strong position in the network security market and
the rapid adoption of its new products to support revenue growth.
Moreover, Check Point's settlement with the Israeli Tax Authorities
is a long-term positive. The company's continuous share buybacks
also bode well for investors. However, stiff competition, an
uncertain economic environment, competitive pressures and currency
fluctuations remain the headwinds. Thus, we reiterate our Neutral
recommendation on Check Point shares.
Founded in 1993, Check Point Software Technologies Ltd. has
evolved into a well-known provider of information technology (IT)
security solutions across the world. The company is headquartered
in Tel Aviv, Israel and offers a comprehensive range of software
and combined hardware and software products aimed at IT security.
Attached either to an operating system, a computer device, a server
or a virtual desktop, the solutions cover network and gateway
security, data security and management needs. Though the company is
incorporated in Israel, consolidated financial statements are
presented in accordance with the United States generally accepted
Check Point entered the industry with its breakthrough product,
FireWall-1, equipped with the stateful packet inspection
technology. A firewall is a device or a set of devices designed to
protect networks from unauthorized access, while permitting
legitimate communications. Stateful Inspection technology, invented
and patented by Check Point, runs on a firewall or a PC and helps
to extract and maintain extensive data for providing a framework
for future screening decisions, from relevant communication layers.
It also expedites network traffic inspection. However, Check Point
has expanded its footprint from "firewall" to include a full
enterprise security offering with endpoint security, remote access
and network security.
The company's network security gateways protect customer data,
reduce security complexities and lower the total cost of ownership.
Customers are able to implement their security policies on traffic
between internal networks and the Internet, as well as between
internal and private networks that are shared with partners.
Check Point's solutions are deployed in nearly all Fortune 100
and Global 100 companies and in over 98% of the Fortune 500 and
Global 500 companies across enterprises, service providers, small
and medium sized businesses, and consumers. Its products and
services are sold through a network of channel partners, including
distributors, resellers, value-added resellers, system integrators
and managed service providers.
The company operates one reportable segment and its revenues are
mainly derived from the sales of its network and data security
products and related software updates, maintenance, support and
other services. Check Point has its operations in different
geographic regions including the Americas, Europe and the
Asia-Pacific, Middle East and Africa.
The market for Internet security solutions is intensely
competitive, with well-capitalized players, such as Cisco Systems
Inc., Juniper Networks Inc., Symantec Corp. and Microsoft Corp.
Although Check Point has been a leader in critical network security
markets through its VPN products, it is now coming out with
complete end-to-end security solutions. Check Point faces tough
competition as it moves into appliances against Cisco and Juniper,
and into endpoint (PC) against Symantec and McAfee (acquired by
Intel Corp.). Besides threats from large software companies like
Cisco, Juniper and Dell, Check Point also vies against smaller, but
more nimble security companies like Sourcefire.
Check Point Software Technologies Ltd. (CHKP): Read
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