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UPDATE 2-Check Point profit beats ests, shares at year high

Published 10/22/2009, 11:14 AM
Updated 10/22/2009, 11:18 AM
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* Q3 non-GAAP EPS $0.52 vs expected $0.49

* Revenue up 17 percent to $233.6 mln

* Forecasts Q4 rev $245-$268 mln vs expected $253.14 mln

* Sees Q4 non-GAAP EPS $0.53-$0.60 vs expected $0.54

* Shares up 3.6 pct to new year high (Adds outlook, CEO quotes, analyst comments, share price)

By Tova Cohen

TEL AVIV, Oct 22 (Reuters) - Internet and network security provider Check Point Software Technologies on Thursday reported record quarterly results that beat expectations, boosted by new products and an acquisition.

The company also raised its forecast for the fourth quarter and full-year 2009, sending its Nasdaq-listed shares up 3.6 percent to a new year high of $31.17 at 1440 GMT.

Israel-based Check Point posted third-quarter net profit excluding one-off items of 52 cents a share, up from 44 cents a share a year earlier.

Revenue rose 17 percent to $233.6 million.

Check Point was expected to earn 49 cents excluding items on revenue of $230.67 million, according to Thomson Reuters I/B/E/S.

The company itself had forecast earnings per share excluding one-time factors of 42 to 51 cents and revenue of $220 million-$236 million.

"We commend the company for putting up a strong performance in a tough environment, especially in light of an unusually weak spending environment within Europe," FBR Capital Markets analyst Daniel Ives wrote in a client note.

Chairman and Chief Executive Gil Shwed attributed the strong results to the company's acquisition of Nokia's security appliance business, which it completed in April, as well as the introduction of new appliance products in the first and second quarters.

"We remain on the sidelines in the near term until we start to see success around the Nokia security appliance acquisition begin to manifest itself on both the top and bottom lines during the course of 2010," said Ives.

He maintained a "market perform" rating but increased his target price to $31 from $29.

Shwed said Check Point has also benefited from stronger relationships with its customers.

"We invested a lot to become close partners with them and offer broader solutions. This has resulted in larger deals," he told a news conference.

The Asia Pacific region had a particularly good quarter, Shwed said, showing a big jump in revenue. The United States also had good results, he added.

Following the Nokia purchase, Check Point is seeking more acquisitions, Shwed said, but would not provide details.

The company has $1.74 billion in cash and investments.

Check Point forecast fourth-quarter EPS excluding items of 53 to 60 cents, and revenue of $245 million to $268 million.

Analysts expect Check Point to earn 54 cents excluding items on revenue of $253.14 million, according to Thomson Reuters I/B/E/S.

"The width of the ranges continues to highlight the uncertainty facing the company and its software brethren," said Ives. "That said, we believe this is a prudent approach to guidance, which will be received well by investors."

Looking to 2010, Shwed said there was room for optimism. "But I don't see a dramatic change in the market," he said.

"We don't see excessive demand or clients rushing to buy."

Barclays Capital analyst Israel Hernandez on Wednesday raised his price target for Check Point to $35 from $29 and maintained an "overweight" rating, citing expectations for a sustained improvement in product sales. (Editing by Rupert Winchester)

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