Check Point issues profit warning
CEO Gil Shwed: First quarter results were impacted by our not acquiring Sourcefire, a shift in product mix, and a slower growth pace in our industry.
Globes correspondent 4 Apr 06 10:11
Internet security software provider Check Point (Nasdaq: CHKP) last night announced a downgrade in its preliminary results for the first quarter of 2006. The company foresees lower than expected first quarter profits, and cut guidance for full-year revenue.
Check Point anticipates revenue for the first quarter of 2006 to be $133-$134 million and GAAP earnings per share (EPS) to be $0.25-$0.26. The company noted that these results include estimates for equity based compensation expenses.
The company noted that deferred revenue was estimated to increase by approximately $10 million in the first quarter.
Revenue for the year 2006 is expected to be $580-$610 million. EPS for the year is expected to be $1.16-$1.24.
Check Point CEO Gil Shwed said, "We believe that our first quarter results were impacted by three main factors: 1.) The change in our decision to acquire Sourcefire; 2.) a shift in product mix toward increased longer term engagements such as software subscriptions and SmartDefense and decreased product revenues; and 3.) a slower growth pace in our industry.
"The success of our subscription and SmartDefense programs resulted in a healthy increase in our deferred revenues and contributed to the overall business generated in the quarter.
"In light of the foregoing factors, we have reassessed our forecast for the remainder of 2006. Reflecting the current market conditions, the customer shift toward subscription contracts in the first quarter and the exclusion of approximately $40 million of Sourcefire results from our annual numbers, we expect revenues for the year to be in the range of $580 - $610 million.
Earnings per share are expected to continue to show growth this year. We expect GAAP EPS for the year, including estimated equity based compensation expenses, to be in the range of $1.16-$1.24. We expect non-GAAP EPS(1) to be in the range of $1.37-$1.45."
The Check Point share closed down 0.95% yesterday at $19.83.
Published by Globes [online], Israel business news - www.globes.co.il - on April 4, 2006
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