Check Point Software Technologies Ltd., the world's second-largest network security company, said second-quarter profit increased 6 percent after its purchase of the Pointsec product line boosted sales.
Net income rose to $69.5 million, or 31 cents a share, from $65.7m., or 27 cents, a year earlier, the Redwood City, California-based company said Tuesday. Revenue climbed 27% to $176.2m. from $138.4m.
Check Point acquired Pointsec, a maker of data-encryption technology for storing sensitive information on laptops and other mobile devices, when it bought Sweden's Protect Data AB last January. Pointsec was approved as a US Defense Department vendor last week.
"The company has made the right moves to stabilize its core business, while Pointsec gives Check Point a leading presence in one of the hottest areas of information technology security," Dino Diana, an analyst at UBS AG, said in a note to investors.
Earnings excluding charges climbed to 38 cents a share in the second quarter from 32 cents a year earlier. That compared with the 36 cents median estimate of eight analysts surveyed by Bloomberg News. In April, Check Point forecast earnings of between 26 cents and 31 cents a share on sales of between $166m. and $176m. for the quarter.
Shares of Check Point were heading for their biggest gain in two years, trading up $1.53, or 6.5%, at $25.23 late morning in New York. Before Tuesday, the shares had risen 43% in the past year, compared with a 33% gain in the Nasdaq Composite Index.
Earnings this year, not counting stock compensation and one-time expenses, will range from $1.48 to $1.58 a share on revenue of between $700m. and $720m., Chief Executive Officer Gil Shwed said on a conference call. A poll of 24 analysts surveyed by Bloomberg before the company's new estimate had forecast earnings of $1.48 on sales of about $707m.
Network security products contributed $155.8m. to revenue, up 12% from a year earlier, while Pointsec data security products bought in $20.4m., an increase of 17% from the first quarter, Check Point said.
"We believe these efforts are now paying off as we are experiencing healthy growth from our data security business," Vice Chairman Jerry Ungerman said on the conference call, referring to the Protect Data acquisition and new products.
Deferred revenue, or orders for which money will be collected in coming quarters, reached $236.2m., a gain of 34% from the same time in 2006. Cash flow from operations fell to $81.5m. from $88.6m. a year earlier. (Bloomberg)