UPDATE 2-Check Point Software Q2 profit up, ups '08 estimate
(Rewrites, adds updated outlook/CEO and analyst comments)
JERUSALEM, July 22 (Reuters) - Check Point Software Technologies Ltd (CHKP.O), one of the world's largest Internet security companies, reported higher quarterly profit on Tuesday and predicted further improvement the second half of the year.
In meeting Wall Street estimates, the Israel-based company posted net income of $79.2 million, or 36 cents a share, in the second quarter, compared with $69.5 million, or 31 cents a share, a year earlier.
Excluding items such as acquisition-related charges and equity-based compensation expenses, Check Point recorded an 8 percent rise in profit at $92.7 million, or 43 cents a share.
Analysts on average were expecting the company to earn 43 cents a share before items, according to Reuters Estimates.
Quarterly revenues rose 13 percent to $199.6 million.
The results were at the top of Check Point's own estimate of earnings per share of 33 to 37 cents -- or 40 to 44 cents excluding one-time items -- with revenues of $190-$200 million.
"Check Point continues to prove many of the naysayers on the Street wrong with its accelerating/renewed growth prospects and strong execution trends in the field despite a challenging spending environment," Daniel Ives, an analyst at Friedman Billings Ramsey, wrote in a note.
"We believe Check Point is a defensive/safe technology to own over the next year, as protecting corporate networks has become a virtual necessity for enterprises in today's enviroment." He maintained an 'outperform' rating and $31 price target.
Shares of Check Point were 0.2 percent higher at $23.50 at 1525 GMT on Nasdaq.
"We believe Check Point's strong results are a positive indicator for other security companies," Robert Breza, an analyst at RBC Capital Markets, wrote in a client note, referring to Symantec (SYMC.O) and McAfee (MFE.N).
OUTLOOK
For the third quarter, Check Point forecast revenues of $194 million to $204 million. It expects to earn 34 to 38 cents a share, or 41 to 45 cents excluding items.
Gil Shwed, Check Point's chairman and chief executive, raised the company's 2008 revenue estimate to between $805 million and $825 million from a previous prediction of $780 million to $820 million.
He told a conference call with analysts the company was not at this time changing its full-year earnings per share estimate of $1.43-$1.53, or $1.71-$1.81 excluding items.
Product and licence revenues amounted to $85 million in the second quarter, up 16 percent from a year ago. Deferred revenues rose 18 percent from a year ago to $279.2 million.
Shwed noted the number of larger deals was increasing.
"We had a very good quarter, in continuation with the previous quarter. The only thing that weighed on results was the dollar, which lowered profit by $6 million, or 3 cents a share, in the quarter," Shwed told reporters on a conference call.
About half of Check Point's revenues are in dollars but much of its expenses are in Israeli shekels ILS=. The shekel has gained some 13 percent so far this year against the dollar, although gains had reached 18 percent earlier in July.
The company said it was basing its 2008 estimates on a largely stable dollar-shekel rate for the rest of the year.
Both the United States and Europe account for 44 percent of Check Point's sales. Shwed said that, so far, the global economic downturn has not had an impact.
"We see in the world there are economic difficulties. Still, our forecasts are good and our results are good," he said.
"The risk certainly exists," he added.
Shwed said Check Point had no plans to move activities abroad as a result of the weak dollar.
He said that while the company remained on the lookout for acquisitions, they were not easy to find. (Additional reporting Tova Cohen in Tel Aviv and Varsha Tickoo in Bangalore; Editing by Quentin Bryar)
