Saturday, April 07, 2012

Palo Alto Networks Files Registration Statement for IPO

 July 6 - Go to  for an update

Next Generation Firewall (NGFW) vendor Palo Alto Networks filed for an IPO (Initial Public Offering) April 6. The valuation of the Initial Public Offering, - $175 million. No date for the IPO has been given. With a fair amount of certainty, you can predict that it won’t coincide with the Facebook IPO.

To view the complete S-1 for the Initial Public Offering, go to the link below. As usual, Risk Factors abound. Palo Alto Networks (The Network Security Company™) has about 25 pages of Risk Factors including the lawsuit with Juniper Networks regarding patent infringement. This NGLS (Next Generation Lawsuit) hasn’t been settled yet. According to Palo Alto Networks in the S-1, “We intend to defend the lawsuit vigorously.” The S-1 is about 150 pages of light reading.

Palo Alto Networks announced total 2011 revenue of $119 million. For the first six months of fiscal 2012, $114 million! Pretty impressive. They lost $12 million in 2011 and for the six months of fiscal 2012 are showing net income of $7.1 million.

The company hasn’t specified how many shares will be put up for sale in the IPO, nor at what price. It also didn't say what ticker symbol it will trade under. PAN doesn’t seem to be taken yet.

Palo Alto Networks doesn’t have to worry about NGFW vendor SonicWall taking the winds out of their IPO. Thoma Bravo sold SonicWall to Dell in March for about $1.2 billion. They had taken SonicWall private for about $750 million a couple of years ago.

Morgan Stanley & Co. LLC, Goldman, Sachs & Co., and Citigroup Global Markets, Inc. will act as lead joint book-running managers for the offering, and Credit Suisse, Barclays, UBS Securities LLC, and Raymond James & Associates, Inc. will act as book-running managers for the offering.

Palo Alto Networks and Check Point Software Technologies are the only two companies in the Leader portion 2011 Gartner Magic Quadrant for Enterprise Firewalls. They rate highest with Vision and Check Point highest with Ability to Execute. Their lawsuit friend Juniper is in the Challenger quadrant with a handful of others. Hewlett Packard is in a not enviable portion of the Niche Players quadrant. Another challenge for Meg Whitman and the Hewlett Packard management team for 2012.

Palo Alto Networks was also the highest rated vendor in the NSS Labs 2012 Next Generation Firewall Security Value Map, released during RSA San Francisco.

Fast growth. Profitable. Gartner likes them. Multiples models including three series of firewalls with different platforms within those depending on throughput, VPN's, sessions desired, etc. Favorable test results from NSS Labs though Palo Alto Networks isn't the only NGFW vendor. You can't call everyone else's NGFW (Fortinet, SonicWall, among others) a kludged together UTM (Unified Threat Management) appliance. Let the pricing of the stock and subsequent valuation (don’t forget to allow for that required first day pop (money left on the table, ouch!)), begin!

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