Check Point's cash balance is becoming an embarassment
Shlomo Greenberg
Check Point (Nasdaq: CHKP) was under pressure on Monday, because CE Unterberg, Towbin feared something. The company's share rose strongly yesterday (strongly for Check Point, that is) because Piper Jaffray and Jeffries & Co. did not fear something. So, should you buy or sell Check Point?
The Wall Street Transcript Online related a tale about what was going on in the software protection industry. "The Wall Street Transcript" spoke with leading analysts in the field, interviewed 13 CEOs of companies in the business, and examined 20 companies. Check Point was one of them, but its CEO was not interviewed. Why? On the basis of the interview list, it seems to me that "The Wall Street Transcript" didn’t want to interview the leading companies, but the specialized ones.
Check Point's edge over its competitors and colleagues is in Israeli start-ups, which we have in abundance, but we're again beginning to hear comments about Check Point's cash reserves. "If they're really concentrating on start ups and small investments," the brokers tell us, "how come they're sitting on a mountain of cash? Let them distribute it." The pressure on Check Point to distribute a dividend will grow with time.
For those who write to me that I personally want a dividend, my answer is simple: I don't care about the dividend at all. As an investor, what interests me is that the value of the asset I hold, in this case Check Point, should rise. With all due respect, Check Point has failed to generate value for its shareholders, in comparison with other technology companies, whose business situation is inferior. I simply believe that dividends add value for shareholders, especially when the money is just sitting in a company's till. On second thoughts, I really want a dividend, and why not?
Published by Globes [online], Israel business news - www.globes.co.il - on April 13, 2005
The above recommendations were made by a person/s working in the investment industry who may hold positions in securities mentioned in the column. This column should not be taken as advice to buy, sell or continue to hold any securities, and anyone acting on the advice of this column does so at his or her own risk
Midas
