Sources inform “Globes” that Check Point (Nasdaq: CHKP) has acquired control of SofaWare Technologies. Two years ago, Check Point gave SofaWare, which develops security solutions for the small office home office (SOHO) market, a $3 million loan that fell due few a days ago, or else Check Point could convert the loan to 60% of SofaWare's equity.
Check Point decided to take over SofaWare, even though its sales seem to be stuck at $1-2 million per quarter. At the same time, Amanet Management and Systems (TASE:AMAN) subsidiary Amanet Technologies decided to convert its loan to SofaWare to shares in the company. Amanet converted its $250,000 loan to a 4.3% stake in the company.
In recent years, Check Point has designated the SOHO market as one of its growth engines, alongside expanding its basket of products for enterprises and the supply of perimeter, internal, and network security products.
Check Point acquired Zone Labs, a developer of firewalls for home users and internal defense systems for enterprises, for $205 million six months ago. Zone Labs had $28 million in revenue in 2003 and Check Point predicts that Zone Labs' revenue will jump 50% to $42 million this year. Nevertheless, the acquisition, which was completed during the first quarter of 2004, will dilute Check Point's earnings per share for the first three quarters of 2004 by $0.02 in each quarter, but will contribute $0.02 earnings per share in the fourth quarter.
The acquisition of Zone Labs is liable to hurt SofaWare, which is in the same business, but Check Point CFO Eyal Desheh said at the time of the acquisition, "SofaWare sells a $300 product to sophisticated home users and the small business market. Zone Labs sells a $40 system. There is a significant difference between the products at the complexity level and in general. SofaWare sells boxes, while Zone Labs sells software that is downloaded from the Internet."
Check Point's management expects to report a profit of $61-67 million ($0.23-0.25 per share) on $123-127 million in revenue for the second quarter of 2004.
Published by Globes [online] - www.globes.co.il - on July 11, 2004