Check Point tops estimates, announces stock split

2 min read

Check Point Software Technologies (Nasdaq: CHKP) reported a strong fourth quarter Thursday, with earnings that topped estimates by 8 cents a share. The Internet security firm also announced a stock split.

Shares were up more than 4 percent to 132.5 in early trading. The Israeli 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 chopping trading in the tech sector. Ahead of the results, analysts were expecting a strong quarter, but Robertson Humphrey was cautious about the near-term outlook due to slowing IT spending and Check Point'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 of 23 analysts was expecting 38 cents a share.

CEO Gil Shwed also reiterated a goal of 50 percent earnings growth next year on a conference call with analysts.

The company 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 growth to strong demand for its Secure Virtual Network (SVN) architecture. It added that its core enterprise business remains strong, and it is working towards 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 and 117 percent over last year's net income and earnings per share, respectively.

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 December 31.

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