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Technology Stocks : Check Point Software (CHKP) -- Ignore unavailable to you. Want to Upgrade?

To: Stefan who wrote (4138)	6/7/1999 6:10:00 PM
From: Logain Ablar	Read Replies (4) \| Respond to of 7150

Stefan: A few adverse items impacted CHKP during the 1998 time. (I'm going from memory and only started following the company in March / April time frame of 98, more informed members can add to this) 1) Balmer visited Israel and was quoted in the newspapers in a light that gave the impression the MSFT / CHKP relationship was detoriating. Part of normal MSFT hardball negotiations and Balmer issued a statement a week later that he was misquoted. While MSFT and CHKP subsequently entered into (renewed) license, damage was done. 2) Company gave forward guidance 3rd quarter would not be as good as 2nd qtr. Income was down 10% from 2nd but up 45% compared to prior year. 3) CSCO entered the market. The stock recovered after 3rd quarter earnings release and conference call and had a strong run until the year end conference call. On this call Gil (the CEO) indicated 30% to 35% growth for this year (I believe revenues not earnings (with higher R&D, Sales & Marketing taxes & shares (due to options)). The stock tanked on two points. 1) The company only met earnings for the 4th quarter of 47 cents. There was a 4 cent f/x loss on cash held in Israel currency. 2) Gil indicated 1st quarter would be flat with 1998 4th quarter due to 1st quarter being typical weak quarter. Stock went from $55 to $45 and while it retraced back to $48 is dropped down to high $30's (36 was major support for a while). After year end earnings there were many positive announcements and indications CHKP was having a strong 1st quarter (Goldman conference anyway) BUT NETA, AXNT and even CSCO were not having a good quarter (CSCO in the VPN/firewall area only - no news on this just an opinion with CSCO teaming up with NETA). CHKP's technicals were in a neutral zone (still in long-term uptreand but not intermediate / shorterm between its sell signal of $38 and buy of $44) until AXNT announced Y2K (stock went from $42 to $38) NETA announced Y2K stock went from $38 to $30 to $23. CHKP recovered to $30 when they announced they were not experiencing similar problems. CHKP mgmt. has now indicated to analyst they are 20% over their plan. During this time CHKP has continued to lead security market in new products and increasing market share (NETA and CSCO are behind the curve). They haven't lost focus nor dropped the ball as others did (Lotus developing for Os2 vs. windows 3.0 or Novell trying to enter office products). They've have good marketing relationships (Nokia in Europe, Fitusju (someone can help on this) in Japan, and don't forget MSFT (windows 2000 will be a big plus to CHKP revenues). The market is still growing and should continue for at least two years (not feasible to guess farther out than that, no (as long as its a continuous two year look). So yes technical look good but will indicate CHKP will be flat 3rd quarter and we go down again. Possible but I doubt it this time with the recent analyst meeting. I can be wrong and have been numerous times in past. But fundamentals are strong and technicals are good. Just be careful on the day of the conference call <gg>. I've gotten long winded on history with only a touch of fundamental. Stock is definitely not for those with faint hearts. Hope this helps with your analysis / research. I'd expect the stock to continue this run until earnings if year-end is guidance. We'll have to see if we have anymore upgrades (a sure sign were near the top <g>). I know you short stocks from the MB thread (if this is the same Stefan). I wouldn't consider CHKP a short at this time (maybe at the end of the day on the day before earnings are released). Have to go. Tim