IT security software and hardware manufacturer Check Point Software Technologies Ltd. (CHKP) recently disclosed that it would be acquiring privately held data security company Liquid Machines. Both companies secured approval from the designated governing bodies to move ahead with the acquisition process.
Liquid Machines offer a wide range of products which help to reduce misuse, modification, loss or theft of intellectual property and other such sensitive information, having a detrimental effect on the business prospects of the end customer. We believe that Liquid Machines’ product lines will closely complement Check Point’s Full Disk Encryption product line that prevents data loss, Virtual Private Networking (VPN) products that provide network security through encryption, and its Data Loss Prevention products that prevent leakage of sensitive data.
We believe that there will be relatively lower integration issues, given the similar business lines. This apart, Check Point will gain access to Liquid Machines products and services, which will in turn enhance the product portfolio of the company. Besides, it will enhance the customer base of the company and its geographic reach.
Check Point has business relationships with Crossbeam Systems, Inc.; Dell, Inc. (DELL); Hewlett-Packard Co. (HPQ), International Business Machines (IBM), Microsoft Corporation (MSFT), Siemens AG (SI) and SanDisk Corporation (SNDK).
As per a recent report published by the technology research firm Gartner, H-P generated $3.4 billion in server revenue during the first three months of the current year, up 16.0% compared to the year-ago period. The company grabbed 31.5% market share. Second in line is IBM, with a market share of 28.4%.
With these firms witnessing improvement in business fundamentals, orders to companies like Check Point should go up. This apart, the overall recovery in IT spending is also expected to have a favorable impact on the company going forward.
We have a short-term Hold rating on the Check Point stock.
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