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Check Point beats estimates, announces stock split

The Internet security company reports a strong fourth quarter, with earnings that topped estimates by 8 cents a share, and also announces a 3-for-2 stock split.

    Check Point Software reported a strong fourth quarter Thursday, with earnings that topped estimates by 8 cents a share, and also announced a 3-for-2 stock split.

    Shares in the Internet security company were up as much as $5.81, or nearly 5 percent, to $132.38 in early trading Thursday. The company also impressed investors with its third-quarter results in October.

    Check Point shares, which have a 52-week high of $177, have held up well amid choppy trading in the tech sector. Ahead of the results, analysts were expecting a strong quarter, but Robertson Humphrey had been cautious about the near-term outlook because of slowing information technology spending and the company's heady price-to-earnings ratio of 124.

    Nevertheless, Check Point ranks among the top stock picks at Merrill Lynch and Salomon Smith Barney. Salomon analyst Chuck Jones said he expects Check Point to deliver at least 50 percent growth over the next two to three years.

    Net income for the quarter ended Dec. 31 was $81 million, or 46 cents a share, up 172 percent over 1999's fourth quarter. First Call's consensus expectation of 23 analysts was 38 cents a share.

    The Israeli company, which has its U.S. headquarters in Redwood City, Calif., said strong demand for its products also drove revenues up 107 percent over last year's fourth quarter, to $140.4 million.

    The company attributed the growth to strong demand for its SVN (Secure Virtual Network) architecture, adding that its core enterprise business remains strong. Check Point is also working toward building technologies for the rapidly growing small- and medium-business market.

    For the year, revenues increased 94 percent to $425.3 million. Net income for fiscal 2000 was $221.2 million, or $1.26 per share, on a diluted basis, an increase of 131 percent over last year's net income and 117 percent over last year's earnings per share.

    During the quarter, the company continued to generate cash, resulting in net cash flow of $113.3 million. Total cash and interest-bearing investments were $656 million as of Dec. 31.

    Check Point also announced Thursday that its board of directors has approved a 3-for-2 stock split, to be effected in the form of a dividend. The record date for the stock split is Feb. 1, payment date is expected to be Feb. 12, and post-split trading is expected to begin Feb. 13.