http://www.news.com/Investor/NewsItem/0,213,0~3~2~Computer%20Data%20Security~AXNT~BLO~390774620~~~~~,00.html Check Point Becomes Traffic Cop to Boost Internet Security Lead Bloomberg News February 24, 1999, 12:33 a.m. PT Check Point Becomes Traffic Cop to Boost Internet Security Lead Tel Aviv, Feb. 24 (Bloomberg) -- Check Point Software Technologies Ltd., whose firewall software protects corporate networks from hackers seeking to break in over the Internet, wants to help companies regulate outbound traffic too. With businesses' connections to the worldwide computer network becoming busier and more complex, Check Point, the world's No. 1 seller of firewall security software, expects growth to come from software that manages network traffic at Internet gateways, and plans to boost its sales force 80 percent this year to help push new products. The Tel Aviv-based company, whose customers include Clorox Corp. and Kyocera Communications Systems Co., says offering a suite of Internet-access management software will also boost sales of its firewall product. It hopes the strategy can help its slumping shares, which fell 33 percent in the past month on indications sales growth is slowing. ``The market is changing,'' said Gil Shwed, Check Point's 29- year-old co-founder and chief executive. ``We can get more value from selling more technology'' to the same customers. The products should also help the company increase its one- third market share for firewalls at the expense of competitors such as Cisco Corp., its closest rival. Slowing Sales Though Check Point boosted net income 74 percent in 1998, slowing sales growth and increased perception of risk in computer stocks has sent its shares tumbling from the all-time high of 56 they touched in January. They closed at 40 3/8 yesterday. Shwed said sales will probably grow 40 percent in 1999, down from 64 percent in 1998, even as it adds newer products, such as software allowing companies to prioritize traffic at Internet gateways and automatically allocate Internet addresses. By integrating the software with the flagship firewall product, the company hopes to increase revenue from newer products to 15 percent of sales by the end of this year from about 4 percent last year. ``It's very important because the firewall as a standalone cannot sustain itself for a long time,'' said Charlie Benshabbat, head of research at Roberston Stephens Evergreen Investments. ``Because the firewall has become a stabilized industry, it has to have other products that work in conjunction with it.'' Check Point was established in 1993 when Shwed, who programmed security software for Israeli intelligence during his compulsory army service, and two other friends realized they could capitalize on the growth of the Internet and the need for security from hackers. E-Commerce The result was their firewall software, which, thanks to an alliance with Sun Microsystems Inc., propelled Check Point to the head of a crowded field of competitors such as Trusted Information Systems Inc. and Raptor Systems Inc. Five years later, annual sales topped $141 million. In 1998, revenue was boosted by the surge in popularity for its virtual private network software, which allows companies to create secure connections between branch offices via the Internet. In future, growth will be driven by expanding dependence on the Internet as a business tool. Electronic commerce volume will climb to $150 billion by 2000 and is expected to reach more than $1 trillion by 2010, according to an estimate by International Data Corp. Relying on alliances with companies such as Bay Networks Inc., Microsoft Corp. and IBM Corp., Check Point is confident it has enough distribution channels to tap into the growth. The challenge will be tracking client needs. ``The major strategy is coming closer to the customer,'' Shwed said. ``Everyone is trying to get to the point where they can offer an integrated suite of security products and management products,'' said John Bowen, a research associate at First Albany Group, which has an ``accumulate'' rating on Check Point. ``We think they have a good strategy, and they have a good position in the high-end market, and we don't expect that to change.'' --Joshua Mitnick in the Tel Aviv bureau (972) 3 694-4207/sr -o- Subscribe: mail majordomoat_private with "subscribe isn". Today's ISN Sponsor: Internet Security Institute [www.isi-sec.com]
This archive was generated by hypermail 2b30 : Fri Apr 13 2001 - 13:20:01 PDT