"For 16 years, during which we have been a public company, four generations of competitors have come and gone," Check Point Software Technologies Ltd. (Nasdaq: CHKP) chairman and CEO Gil Shwed told "Globes" in an interview following the publication of the company's financial report for the second quarter of 2012. "The charge of excessive conservatism has always been levelled at us, but I am glad to be among the survivors, and not be counted among those who have disappeared because they were aggressive and incautious."
Check Point's battle with Palo Alto Networks Inc. is more about image than reality. Check Points has a 13% share of the IT security market, and Palo Alto's share is a fifth of this. Shwed: "Palo Alto is a competitor, but it's still a niche player. We have better technology and we have many more customers and installations. They're an aggressive competitor, but we see that customers like our advantages."
Some Wall Street analysts saw the struggle between the companies affecting investors, who were allegedly pulling their money out of Check Point and were hot to invest in Palo Alto. Shwed rejects this analysis, saying, "You see small companies that draw much more attention in the capital market than in the products market. Investment institutions have $8 billion in Check Point, whereas Palo Alto is raising $200 million. We're not competing for the same dollars.
"This is the behavior of the capital market, and naturally it's less trivial that Check Point creates another $20 billion for investors. In the first quarter, we saw the Facebook IPO, which everyone rushed after with all the big bankers in the world, and all of a sudden, the capital market is perceived as less smart as it seemed."
The rivalry between Check Point and Palo Alto has its personal aspect, as Palo Alto was founded by a former Check Point executive Nir Zuk, who left the company over disagreements with Shwed. "They have definitely set their sights on me personally, and on Check Point," says Shwed. "I think that there is little chance that Palo Alto will be a success. I don’t want to make the fight personal, but to reach customers with the better technology.
"We've always prided ourselves on selling better technology to more customers, and on adopting positive strategies. Regrettably, others have chosen a strategy of digging up dirt. This probably says more about their personalities than ours. There will always be competitors, and it's a good sign that there are."
Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2012
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