Check Point Software Value Stock - Dividend - Research Selection

Check Point’s sole focus has been on IT security. Making the Internet secure, reliable and available for corporations and consumers everywhere has been – and continues to be – our ongoing vision. Building on our heritage of pioneering the first firewall, and with a long track record of industry-leading security gateways, Check Point is continuing to develop cutting-edge solutions to enable maximum security and business efficiencies. Today, Check Point is one the largest pure security vendors globally. We are committed to addressing the real needs of our customers and to developing new and innovative security solutions that redefine the security landscape.

Future of Cyber Security: Cloud, Mobile, and Threat Prevention

Our mission becomes especially vital in a rapidly changing digital world that is less and less controlled, with disappearing boundaries. Hackers are innovating just as quickly as enterprises, and are finding new ways to attack an increasingly connected world. Malware is increasingly being put into an ecosystem that traditional security techniques cannot always prevent. Attacks targeting networks, mobile devices, and cloud environments are on the rise. Ransomware, a type of computer malware that can hold a victim’s data hostage, was recently used to attack trains in San Francisco; dangerous hacking tools are being sold online; and personal data is constantly exposed. The Gooligan breach that we revealed in November 2016 demonstrates the scale of these current threats, with more than one million Google accounts breached by mobile malware.

In 2017, we expect cyber security to play an even bigger role in our lives. Advanced threats will continue to grow. The continued expansion to the cloud will spark evolving security issues. Mobile will continue to be a high priority. All of this drives and shapes a new imperative to provide the most advanced cyber security solutions that anticipate and solve for the challenges of the future. At Check Point, we see this aligned to three pillars: cloud, mobility, and threat prevention.

Business leaders must guard against things they cannot see, know, or control. They need to protect every point in the infrastructure, from mobile to cloud to virtual and physical. They need to be able to prevent attacks at every stage. To do so, enterprises must have visibility to tomorrow’s threats, not just the threats of today. We do not believe that the right solution is to continuously add point solutions that result in complex technology mosaics. These point solutions typically result in security gaps in an enterprise’s infrastructure. These tenets are the basis for Check Point’s security vision—a single architecture that consolidates comprehensive management and integrated threat intelligence, with the most advanced threat prevention solutions for cloud, mobile, and on-premise networks.

Organizations around the world rely on Check Point to protect their networks, customers, employees, assets, data, and reputation from cyber-attacks. For more than 20 years, Check Point has been at the forefront of the cyber security industry. With a reputation for industry firsts and continuous innovation, Check Point enables millions of users to safely and confidently accelerate their businesses in an ever-changing digital economy.

Check Point Technology Leadership in 2016

Gartner

Leader Enterprise Network Firewall Market Quadrant 2016

Leader Unified Threat Management Magic Quadrant 2016

NSS Labs

Recommended in Next Generation Firewall Test 2016

Recommended in Breach Detection Systems Test 2016

Recommended in Intrusion Prevention Systems Test 2016

Forrester

Leader Automated Malware Analysis Forrester Wave 2016

Common Criteria Certification: Check Point was awarded Common Criteria (CC) certification for R77.30, following a rigorous third-party evaluation and testing process.

Business Highlights

Details regarding the important events in the development of our business since the beginning of 2016 are provided in “Item 5 – Operating and Financial Review and Prospects” under the caption “Overview.”

We were incorporated as a company under the laws of the State of Israel in 1993 under the name of “Check Point Software Technologies Ltd.” Our registered office and principal place of business is located at 5 Ha’Solelim Street, Tel Aviv 6789705 Israel. The telephone number of our registered office is 972-3-753-4555. Our company’s web site is www.checkpoint.com. The contents of our web site are not incorporated by reference into this Annual Report.

This Annual Report is available on our web site. If you would like to receive a printed copy via mail, please contact our Investor Relations department at 959 Skyway Road, Suite 300, San Carlos, CA 94070, U.S.A., Tel.: 650-628-2050, email: ir@us.checkpoint.com.

Our agent for service of process in the United States is CT Corporation System, 818 West Seventh Street, Los Angeles, CA 90017 U.S.A.; Tel: 213-627-8252.

Cyber Security Industry Today

Organizations of all sizes face a challenging threat landscape. With countless new connections formed every day, the world is more globally linked than ever. Cloud, mobility, virtualization, and the Internet of Things (“IoT”) are changing the way customers deploy and consume technology. While this provides more opportunities to innovate and compete, the network edges are blurring. As a result, our networks are becoming more complex, which increases the risk of cyberattacks. Specific trends within this dynamic landscape include:

Increased Sophistication of Threats and Attacks. Today’s threats use sophisticated technology, the Internet, and deception to acquire sensitive information and to disrupt business operations. Many of these threats contain new, unknown signatures when they reach their targets. Because these new, unknown signatures – also known as zero-day threats – are not recognized, they cause damage to their targets immediately. Enterprises need to put in place multi-layer defenses to prevent, detect, and extract these threats before they cause damage.

Rise of Mobility. The proliferation of smartphones and people working remotely through mobile devices has expanded the need to safeguard and manage access to information. Regardless of location, employees and other service providers need constant connectivity to the enterprise network, which also opens up new avenues of attack. As a result, enterprises relying on remote connectivity need to ensure security across all points of their infrastructure and deploy mobile-specific security solutions. As an example, in 2016, Check Point discovered malware embedded in mobile applications, such as ‘DressCode,’ downloaded from Google Play and ‘QuadRooter’, a set of four vulnerabilities affecting Android devices. It also revealed the ‘Gooligan’ breach in November 2016 that demonstrated the extent of these current threats, with over 1 million Google accounts breached by mobile malware.

Cloud Computing and Network Virtualization. Cloud computing, or Internet-based computing, provides resources, software and data storage to computers and other devices on demand using shared servers. New virtual environments and public and private clouds drive the need for enterprise security for both on-premise and in-the-cloud infrastructures. Deploying cloud based security solutions are crucial and are as important as on premise network security measures, to ensure that assets in the cloud are not compromised and that attacks are contained before laterally spreading within the cloud, across virtualized server and network environments.

Overall Complexity within the Enterprise IT Infrastructure. The increasing complexity of deploying, managing, and monitoring multiple security technologies is another key trend. As a result, enterprises face two challenges: how to cost-effectively manage a patch-work of point product solutions, and how to ensure that no gaps are left in the infrastructure. Single-architecture solutions with simplified management can keep the security infrastructure robust, yet simple to manage and adaptable to ongoing changes.

Increased Data Privacy and Compliance Regulation. Data has long been a prime target for hackers seeking financial information, intellectual property, insider business information and authentication credentials. These attacks have exposed personal health and financial data of millions of consumers. As a result, governmental regulations regarding data privacy are on the rise globally, including the new EU based data protection regulations. To ensure compliance – and avoid sanctions, fines and penalties – enterprises need to implement cybersecurity protections and security controls to prevent data loss or data theft.

Role of Social Engineering. Despite constantly improving security solutions, the human element is still a wild card. Attackers attempt to bypass security mitigations and restrictions, using phishing techniques, by tricking employees into exposing credentials or other sensitive information, or to open infected files or infected links. Specific technologies to detect phishing attempts, setting specific security policies, increasing segmentation of the infrastructure, and deploying multi-layer defense solutions are needed to prevent these types of attacks.

Emergence of Security for Operational Technology (OT) and Internet of Things (IoT). Gartner predicts that by 2020, there will be over 21 billion endpoint “connected things” in use worldwide. These connected things vary from smart light bulbs, to wearables and driverless cars, and to almost any area of our lives. In addition more and more OT SCADA based production lines, utilities and critical infrastructures are connected to the Internet and the mix between OT and IT networks is clearly evident. This continuously connected world opens new avenues of attack as the risk of IoT vulnerabilities leading to IT threats becomes more evident. As a result, more robust security will need to be implemented. Enterprises that use or connect with these types of products will need to consider how to prevent unauthorized access and other attacks to their infrastructures through these connected technologies.