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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: lh56 who wrote (47160)	4/4/2002 5:36:33 PM
From: lh56	Respond to of 99280

more b.c analysis: CHKP "04-Apr-02 Checkpoint Software (CHKP) 22.32 -5.14: This morning, Checkpoint Software added itself to the list of stocks that have recently 'fallen off a cliff.' Before the open, Checkpoint reduced its first quarter outlook to $0.24-$0.25 per share versus the current consensus estimate for earnings of $0.29 per share. At the same time, it now expects revenues in the range of $104-$105 million which is roughly 14% shy of the consensus expectation at $122.2 million. Checkpoint is a security software vendor -- it operates in the firewall market and also sells to the less developed but fast growing virtual private networks (VPN)/firewall market. According to management, the company's shortfall is a consequence of a 'depressed IT spending environment.' Apparently the purse strings are especially tight in the enterprise market as management did not match its expected level of enterprise business in March. Nonetheless, management was also quick to add that it did make nice headway into its new market segments -- these are the low end market as well as the wireless infrastructure market. So that more or less sums up the official explanation. The concern among investors is that Checkpoint may have relied on a disproportionate contribution from deferred revenues in the past. Note that these revenues also tend to boost profitability as the expenses associated with them have generally been incurred earlier. With the negative pre-announcement this morning, it looks like the company has fewer of these resources available to it which increases the company's reliance on variables outside its control (i.e. the ability to make new sales). This also raises the risk to CHKP as an investment which helps explain this morning's swift and severe early sell pressure. -- Mike Ashbaugh, Briefing.com "