Check Point Software q2 profit up - Update

(RTTNews) - Tuesday morning, IT security products and services provider Check Point Software Technologies Ltd. (CHKP | Quote | Chart | News | PowerRating) posted a 14% growth in its second-quarter net profit, driven by higher product and license revenue. On a non-GAAP basis, earnings per share rose 12% and came in line with the Street view.

Q2 Results

The Tel Aviv, Israel-based company's second-quarter GAAP net income advanced 14% to $79.2 million from $69.5 million in the year-ago quarter. On a per share basis, earnings totaled $0.36, up 18% from $0.31 per share in the same quarter of last year.

Net income in the most-recent quarter factored in acquisition-related charges of $8.9 million and equity-based compensation expenses of $8.4 million. Net of taxes, these charges totaled $13.5 million. Net income in the prior-year quarter encompassed acquisition-related charges of $10.3 million and equity-based compensation expenses of $8.6 million. Net of taxes these charges totaled $16.2 million.

On a non-GAAP basis, net income was $92.7 million, an increase of 8%, compared with $85.7 million in the prior year quarter. Earnings per share, on a non-GAAP basis, grew 12% to $0.43 from $0.38 per share in the comparable quarter of the previous year.

On average, 17 analysts polled by First Call/Thomson Financial expected the company to report earnings of $0.43 per share for the quarter.

Check Point noted that operating income increased to $83.6 million from $68.8 million reported in the second quarter of fiscal 2007.

Quarterly revenues amounted to $199.6 million, 13% higher than the previous year's revenue of $176.2 million, and surpassed eighteen Wall Street analysts' consensus revenue estimate of $195.10 million.

Gil Shwed, chairman and chief executive officer at Check Point, commented, "Check Point's success during the quarter is a direct result of effectively executing our Total Security strategy. We have continued to experience strength across our business which is reflected in the double-digit year over year growth in revenue, earnings per share and deferred revenue."

Products and licenses revenue grew 16% to $84.9 million from $73.3 million a year earlier, while Software updates, maintenance and services revenue rose to $114.6 million from $102.9 million in the same quarter of 2007.

As of June 30, 2008, the company had deferred revenue of $279.2 million, an 18% increase, compared to deferred revenues as of June 30, 2007. Check Point's cash flow from operations rose to $82.6 million from $81.5 million in the year-ago quarter.

Research and development expenses for the latest quarter totaled $23.8 million, up from prior year's $20.8 million. Selling and marketing expenses rose to $56.6 million from $55.2 million a year-ago, while general and administrative expenses increased to $13.0 million from $11.6 million in the three months ended June 30, 2007.

Year-To-Date Results

For the six-month period, the company reported a GAAP net income of $157.4 million or $0.71 per share, compared to $116.4 million or $0.52 per share in the year-earlier period.

Non-GAAP net income for the period ascended to $186.1 million or $0.85 per share from $164.3 million or $0.73 per share last year.

Year-to-date total revenues increased to $391.2 million from $340.2 million in the corresponding period of the previous year.

Peer Performance

Among Check Point's rivals, Cisco Systems, Inc. (CSCO | Quote | Chart | News | PowerRating) is due to release its quarterly results on August 5. Wall Street analysts have a consensus earnings estimate of $0.39 per share, on revenues of $10.31 billion for the quarter.

Another peer, Juniper Networks, Inc. (JNPR | Quote | Chart | News | PowerRating) is slated to release its second-quarter results on July 24. Analysts expect the company to report earnings of $0.27 per share, on revenues of $852.25 million for the quarter.

Yet another competitor, Secure Computing Corp. (SCUR | Quote | Chart | News | PowerRating) would announces its second-quarter results on July 28. Wall Street analysts are looking for earnings of $0.06 per share, on revenues of $65.26 million for the quarter.

Stock Quotes

CHKP closed Monday's trading session at $23.45. For the past 52-weeks, the stock has been trading between $20.00 and $26.79.

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