Stock in leading firewall vendor Check Point Software Technologies (CHKPF) dropped 11 percent today after it filed to sell 5.5 million shares in a secondary offering, including 4.7 million by founders and venture capitalists who invested early in the company.
But analysts said the stock's decline may have been caused by today's sell-off among technology stocks, particularly the networking sector, rather than in reaction to the filing. At today's close, the offering would raise about $100 million for selling shareholders and 18.7 million for the company before underwriter commissions.
The stock dropped 3 today to close at 23-3/8 after trading as low as 22-1/4 during the day on moderate volume.
"All the tech stocks have gone down today," said Kama Krishna, research analyst with Laidlaw Securities. He noted that Check Point had risen to around 27 after its recent positive earnings report, which also prompted UBS Securities' analyst Michael Agarawal to raise his recommendation on Check Point to "buy."
The preliminary prospectus for the offering has not been filed, but a source close to the company said the primary sellers were venture capital firms that had invested early in the Israel-based company. Israeli venture capitalist BRM Technologies is reportedly selling 2.5 million shares, leaving it with 17 percent ownership. U.S. Venture Partners and Venrock Associates are selling 200,000 shares apiece, leaving them with around 8 percent ownership each.
Founders Shlomo Kramer, Marius Nacht, and Gil Shwed are reportedly selling 400,000 apiece to diversify their portfolios, leaving them collectively with 37 percent of the shares after the secondary offering.
The filing comes shortly after the end of the 180-day lockup period since Check Point's June initial public offering. Inside shareholders are barred from selling for that period. After the initial offering, 86 percent of shares remained in the hands of early investors and founders.