For its fiscal fourth quarter, the company saw revenue jump to $75.6 million -- representing an increase of 88% and topping the $40.2 million it reported in the same quarter of a year ago. Also impressive was its reported loss, which narrowed to $4.6 million on a GAAP basis or 18 cents per share. This compares favorably to its net loss of $6 million in the same period of a year ago.
Clearly there is enough evidence in Palo Alto's numbers to suggest it has begun to steal market share from Check Point. It remains to be seen how significant this will become. But certainly, investors of Check Point can't rest easy seeing such impressive growth numbers from a new rival. Also causing some uneasiness is that Cisco, Fortinet and even
, which just acquired
, have all begun to make great strides in the enterprise security space. How will Check Point grow when there are so many gunning for its business?
There are always at least two ways to meet the competition head on -- either through investments in R&D or an acquisition. While Dell and Cisco appear to have taken the latter route, investors of Check Point have grown frustrated that the company has yet to decide which path it wants to take.
While it can be argued that Check Point has indeed spent on R&D, $28.5 million during the quarter, it pales in comparison to Cisco, which spent $1.4 billion trying to win its market.
I still like Check Point and even more so now that the stock has taken this recent beating. The company's challenge is to prove to a skeptical market that it has what it takes fight off the competition while producing the rate of growth that investors want. I wonder, though, how much time are investors willing to give Check Point seeing as how dominant Palo Alto looks right out of the gate.
While it is reasonable to expect the rate of growth demonstrated by Palo Alto to decrease, in the meantime it serves as cause for some insecurities for Check Point's investors. On the bright side, Check Point has a solid lead in the market and enjoys a broadly loyal consumer base. What's more, management seems to understand the competitive threats and appears willing to invest for the future while improving its technology. With the company's track record of solid performances, it deserves time to prove its value -- as unsettling as it might be for investors.
At the time of publication, the author held no position in any of the stocks mentioned
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.