I’ve long been fascinated at how different investment perspectives can produce dramatically different conclusions over stocks. The only sure conclusion I’ve drawn with any certainty over the issue is that investors should stick with the investment approaches that they advocate. With this in mind I decided to sell my position in Check Point Software Technologies Ltd. (NASDAQ:CHKP) not because I don’t think it is a ‘buy,’ but because it has now become much more of a value play rather than the kind of GARP stock that I buy/hold.

Check Point Disappoints

Check Point revenues came in below analyst forecasts and slightly below the midpoint of the wide guidance it gave at the last set of results, although non-GAAP EPS came in at the top of internal guidance at 91c. Moreover, the guidance was weaker than expected:

• Q1 revenue guidance of $320-332 million vs. consensus of $334 million
• Q1 non-GAAP guidance of 74-80c vs. consensus of 80c
• Full year revenue guidance of $1.4-1.45bn vs. consensus of $1.45bn
• Full year non-GAAP EPS guidance of $3.30-3.50 vs. consensus of $3.48

In general the top end of guidance is holding on to the analysts’ consensus. On a more positive note, Check Point does tend to be conservative in its guidance, and the global economy has been weaker in the second half of 2012. Nonetheless there are a few worrying signs here.

Firstly, I want to outline how product sales growth has now turned negative.

This is not a problem in itself because recall that Check Point bundles software blades with its hardware platform, so pricing of software/hardware can change within the bundle. In addition, Check Point has been managing a transition to a new product appliance line and dealing with a weaker global economy (Europe is traditionally around 40% of its sales). Both of which have turned product & license sales growth negative in the quarter. Meanwhile software blade growth has remained impressive.