Check Point Installs Its Acquisition

At the Demo conference back in September, I got a chance to talk with the folks at ZoneLabs, which is owned by Check Point Software Technologies (Nasdaq: CHKP  ) . They were showing off cool software called ForceField that protects your Web browser from nasty threats like viruses, phishing, and drive-by downloads (you can get a free download of the software). To me, it's further evidence of Check Point's strong security infrastructure and how it can be leveraged into new categories.

What's more, the company's business continues to grow nicely. In yesterday's fiscal Q3 report, Check Point posted revenue growth of 29%, to $184 million. There were 15 deals in excess of $1 million, which is an indication that Check Point's expanded product line is getting traction. Q3 net income came to $76.7 million, up 8% over last year. Cash flow from operations was up 18%, to $88.8 million, and there's about $327 million in cash and cash equivalents.

A key part of Check Point's growth strategy is its acquisition of Protect Data AB. With the transaction, the company picked up cutting-edge security solutions for mobile devices and laptops. It's a big differentiator in the fiercely competitive security space, which includes rivals like EMC (NYSE: EMC  ) , IBM (NYSE: IBM  ) , McAfee (NYSE: MFE  ) , and Symantec (Nasdaq: SYMC  ) .

The good news is that Check Point has integrated Protect Data and should now get a nice boost. In fact, based on the earnings conference call, management thinks Q4 looks promising and pegged revenue guidance at $196 million to $208 million, with earnings of $0.42 to $0.46 per share. 

But more importantly, the growth should be more than a short-term spurt as Check Point cross-sells Protect Data's offerings. And, of course, the core business is doing fine. Thus, for long-term Foolish investors, Check Point is definitely a stock to consider.

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