Sorry, somehow I double entered this post.
Regards, Mark
Tim, good recap of events. I'd add, there was also a general crisis of confidence when it looked like too many firewall vendors were going to make a commodity out of this product. It seemed like we saw a new firewall product a week from companies like Hitachi, IBM, etc. Add that to the feeling that Microsoft would just simply make it a part of NT and damage all the players in general. Well, all these major systems failed to take down Checkpoint. Clearly, the cross platform implications of security didn't give these companies much advantage, not to mention the fact that Firewall 1 was a standard and too many people had invested into learning the product to bother with new entries. The Gorilla had been established even if the market's faith was not behind it.
Price competition hit, but the position of power Checkpoint held as the standard helped them while others have had to scramble to keep up. At the same time, new product segments have emerged such as security for the VPN which Checkpoint could have missed, but again they've been on time taking leading positions. In the end, they've been good at holding onto their position and building new positions despite continuous threats.
Also, Network Associates looked like they would provide a formidable threat, in addition to Cisco as you mentioned. Then, we had a major performance failure recently which suggested NetA was not taking their synergies into any great advantage, and if anything Checkpoint was further distancing themselves from the pack, which is where we are today.
Finally, for the last 2 years we've heard about the threat y2k will put into corporate IT spending, but again we've seen the need for security was too great to ignore. We've seen many other enterprise companies like Oracle hit a wall of resistance. Surely, Checkpoint would have had an unbelieveable success without y2k issues, but as it is they've done pretty well.
Mostly, Checkpoint has passed through a series of crisis' of confidence which have continuously pushed back every advance they made in share price. It's been very frustrating and probably this has kept many from holding long term. The most recent crisis of confidence happened when Axent and NetA said they were having problems, but now we see Checkpoint is 20% ahead of plan. Well, one man's loss is anothers gain? Maybe Checkpoint is just going one step farther in their leadership role.
I wonder, now that things are looking great again, is it time to sell and wait for the next dip or will we smash through resistance and go to new highs?
Certainly the media is divided on the Internet sector and suggests Yahoo will pull investment as we near their earnings report might bring renewed confidence. Checkpoint certainly is getting good press as a sane Internet investment which can't hurt.
Regards,
Mark |
