Tech

Return to Article

Fortinet Gets Set For IPO

James Rogers

SUNNYVALE, Calif. (TheStreet) -- Fortinet(FTNT) is set to become the latest tech company to take the IPO plunge.

The security specialist increased the size of its IPO Monday, offering 12.5 million shares, as opposed to its original plan of 12 million. Priced between $9 and $11 a share, Fortinet is hoping to raise $137.5 million at the high end of its offering. Shares traded at $16.60 in Thursday morning trading.

It will trade on the Nasdaq under the ticker symbol FTNT. Fortinet's IPO is underwritten by Morgan Stanley(MS), JPMorgan Chase(JPM) and Deutsche Bank(DB) Securities.

A note on the IPO Boutique Web site, which tracks the latest offerings, said that Fortinet's shares could begin trading on Wednesday.

Fortinet is well positioned to tap into the growing demand for cybersecurity. Earlier this year, for example, a headline-grabbing denial-of-service attack attempted to bring down the likes of the New York Stock Exchange and White House Web sites by bombarding them with requests from more than 100,000 infected computers dotted around the globe.

The company's core technology is its FortiGate appliance, a sort of security "god-box" combining a range of features, including anti-virus, firewall and virtual private network (VPN) capabilities. Long regarded as one of the security sector's rising stars, the company brought in revenue of $123.5 million, $155.4 million, and $211.8 million in 2006, 2007 and 2008, respectively.

IDC estimates that Fortinet has around 15.4% of the unified threat management (UTM) appliance market. The tech research firm also predicts that the UTM space will grow from $1.3 billion in 2007 to $3.5 billion in 2012, which bodes well for Fortinet's future as a public company.

The security specialist, which competes with Symantec(SYMC), McAfee(MFE) and Sophos, brought in $181.4 million during the first nine months of 2009, according to an SEC filing.

Scott Sweet, senior managing partner at IPO Boutique told TheStreet that the probability of Fortinet pricing at the top end or above its offering range is high.

"The company became profitable in 2008 and has had a positive cash flow from operations since 2005," he explained, in an email. "With sales of over 450,000 appliances to more than 75,000 end-customers, the company has the potential to leverage additional sales of FortiGate and related appliances to existing customers."

Fortinet's offering would be the latest in a string of tech-related IPOs. Medical e-billing specialist Emdeon(EM) went public during the summer, with shares quickly surging past their offering price.

The global economic slowdown prompted a hiatus for tech-related IPOs, although recent months have seen a number of firms take the public plunge. These include Avago Technologies(AVGO) CDC Software(CDCS) and software specialist LogMeIn(LOGM).

Other tech-related offerings this year include Ancestry.com(ACOM) restaurant reservation Web site OpenTable(OPEN)network management software company SolarWinds(SWI), hi-res imagery specialist DigitalGlobe(DGI)and language learning software firm Rosetta Stone(RST).

-- Reported by James Rogers in New York.