The idea of being prepared for anything is working out for Check Point Software Technologies (CHKP), a security vendor that has delivered double-digit earnings and sales growth the past seven quarters.
The company, which is in the latest IBD 50 ranking of top stocks, sells clients a way to centrally manage their network security, yet only buy what they need for the moment — and then scale up and/or purchase additional features.
Known for methodical execution on strategy, a big cash cushion and a cautious approach to acquisitions, Check Point sports an operating profit margin of more than 50%. That's far and away the highest of IBD's 17-company Computer Software-Security industry group.
Programmer Gil Shwed co-founded the company in 1993 with two others after serving in the Israeli military, where he linked top-secret computer networks. The software firewall he invented made Check Point a big player in network security.
Shwed recently spoke with IBD about the approach Check Point is taking. It involves selling what the company calls software "blades" that do different functions such as network policy management, virus prevention, data loss prevention and mobile protection. Check Point describes each blade as a "logical security building block." Companies can install these building blocks onto their own servers or onto an appliance they buy from the company.
IBD: How is the blade approach helping Check Point?
Shwed: We're selling broader solutions with more blades, and each customer becomes a larger customer. For customers, the cost of implementing a solution with our bladed architecture can in many cases be 90% lower than a stand-alone product. A large company will need multiple blades. Each blade costs a few thousand dollars. It can amount to around a few tens of thousands when a stand-alone deal would've been hundreds of thousands.
Beyond the products and the strategy, the U.S. economy has been pretty good in the past year. In some parts of the world we had a very good focus on large accounts, and that helped.
I think we've given pretty good guidance (for 2011): 10% or slightly more growth. (Revenue rose 19% last year and earnings per share 21%.)
It's a balanced sort of projection. On one hand I think there's definitely potential for more — and the future always has a lot of unknowns coming out of a strong year. You'd say yes, we want to continue that momentum. On the other hand, you say maybe that won't happen.
The company, which is in the latest IBD 50 ranking of top stocks, sells clients a way to centrally manage their network security, yet only buy what they need for the moment — and then scale up and/or purchase additional features.
Known for methodical execution on strategy, a big cash cushion and a cautious approach to acquisitions, Check Point sports an operating profit margin of more than 50%. That's far and away the highest of IBD's 17-company Computer Software-Security industry group.
Programmer Gil Shwed co-founded the company in 1993 with two others after serving in the Israeli military, where he linked top-secret computer networks. The software firewall he invented made Check Point a big player in network security.
Shwed recently spoke with IBD about the approach Check Point is taking. It involves selling what the company calls software "blades" that do different functions such as network policy management, virus prevention, data loss prevention and mobile protection. Check Point describes each blade as a "logical security building block." Companies can install these building blocks onto their own servers or onto an appliance they buy from the company.
IBD: How is the blade approach helping Check Point?
Shwed: We're selling broader solutions with more blades, and each customer becomes a larger customer. For customers, the cost of implementing a solution with our bladed architecture can in many cases be 90% lower than a stand-alone product. A large company will need multiple blades. Each blade costs a few thousand dollars. It can amount to around a few tens of thousands when a stand-alone deal would've been hundreds of thousands.
Beyond the products and the strategy, the U.S. economy has been pretty good in the past year. In some parts of the world we had a very good focus on large accounts, and that helped.
I think we've given pretty good guidance (for 2011): 10% or slightly more growth. (Revenue rose 19% last year and earnings per share 21%.)
It's a balanced sort of projection. On one hand I think there's definitely potential for more — and the future always has a lot of unknowns coming out of a strong year. You'd say yes, we want to continue that momentum. On the other hand, you say maybe that won't happen.
Posts
0 comments:
Post a Comment