March 20 - Palo Alto Networks IPO Preparations Start to Heat Up

March 20 Addendum

Palo Alto Networks will seek to raise about $250 million in an initial public offering this year that would value the Internet security company at about $1.5 billion, said a person with direct knowledge of the situation.

The company chose Goldman Sachs Group Inc., Morgan Stanley, Credit Suisse Group AG and Citigroup Inc. as its underwriters and will submit an S-1 filing in a couple of weeks.

http://www.bloomberg.com/news/2012-03-19/palo-alto-networks-said-to-file-250-million-ipo-in-weeks-1-.html

Nothing in the press yet as to what quarter the IPO will take place. Some more conversations will take place at Check Point and Juniper, most likely. Palo Alto Networks coined the phrase Next Generation Firewall (NGFW), though other companies rightfully can say that they offer the same functionality. SonicWall and Fortinet, for example. S-1's make interesting reading as companies have to start letting the investment community look more deeply into the company's financial workings, and view (the copious) risks that the company has identified.

Original Post

Palo Alto Networks has supposedly hired Morgan Stanley, Goldman Sachs, and Citigroup to lead its (IPO) initial public offering, which is expected this year. The IPO market is definitely heating up. Palo Alto Networks received a recommended rating in NSS Labs’ latest firewall report. Palo Alto Networks was also recognized as a leader along with Check Point Software Technologies in the Gartner 2011 Magic Quadrant for Enterprise Network Firewalls. You can go to the Palo Alto Networks site to register for and download both the Gartner and the NSS Labs reports. Pundits will probably be coming up with a valuation in the coming weeks.

Strengths Gartner Mentioned Include

· Highly effectively application identification, application categorization, and ease of confguration

· Performed is as advertised in specification sheets (now that’s a novel idea ;))

A Few of The Cautions

· Lacks Common Criteria EAL-4+ for Information Technology Security Evaluation for the firewall

· Limited number of models when compared with competitors

· Some confusion with respect to selling into the secure web gateway (SWG) marketplace

http://www.paloaltonetworks.com/cam/gartner/index.php

NSS Labs 2 page analysis, the “2012 Next Generation Firewall Security Value Map™” was released during RSA San Francisco 2012. The value map illustrates Block Rate versus Price per Protected Mbps. The SonicWall SuperMassive E10800 and the Palo Alto Networks PA-5020 NGFWs were the “winners”, far up in the right hand corner. http://www.paloaltonetworks.com/cam/nss-labs/2012-svm.php

and http://kensek.blogspot.com/2012/03/sonicwall-palo-alto-networks-top.html

What would Palo Alto Networks valuation be in an IPO? You may want to look at the “ratios” from companies like Check Point Software Technologies, Juniper Networks, and Cisco and back calculate for some estimates as to its value during an IPO. Estimated revenues for PAN - $700 million.

Fun times for Founder and CTO Nir Zuk, principal engineer at Check Point Software Technologies and one of the developers of stateful inspection technology, and the rest of the Palo Alto Networks management team as this IPO moves forward.

http://www.reuters.com/article/2012/03/08/paloaltonetworks-ipo-idUSL2E8E88P820120308