The results from the maker of Internet security products, including firewalls and virtual private networks, are a good sign for the sector, which analysts have said is stumbling due to the downturn in information technology spending. Check Point shares were up $2.63 to $38.05. Analysts had originally predicted that security spending would be the last thing to get cut from even the most penny-pinching budgets. But the past quarter has seen warnings and reduced guidance from the likes of Internet Security Systems, Symantec, RSA Data Security and Trend Micro. Check Point issued a mixed announcement June 3, saying that it would meet its second-quarter estimates but warning that revenue would be slightly below predictions.
Monday, the Israel-based company said second-quarter net income was $86.8 million or 33 cents a share, topping First Call's consensus estimate by a penny. It was also up 100 percent over last year's comparable quarter.
The company hit its downwardly revised revenue estimate with $142.1 million. On June 3, the company said revenue for the second quarter would be between $140 million and $142 million, short of First Call's estimate of $150 million.
Pacific Crest Securities analyst Rob Owens maintained a "buy" rating on Check Point shares following the report, and noted that demand for the company's products remains healthy.
"Management commented that the pipeline remains strong," particularly with the release of its new products," Owens wrote in a research note Monday.
The analyst also observed that second-quarter revenue was not an indication of changes in the competitive landscape. Rather, it was mostly the result of a decision to discontinue recognition of third-party hardware sales. The new revenue recognition policy resulted in $3 million to $5 million less revenue for the quarter, Owens said.