Security Vendor Fortinet Files for IPO

Although no details are available on the number of shares to be offered or on the price range of the offering, security-vendor Fortinet has filed a registration statement for a proposed IPO.

According to reports from Reuters and Dow Jones Newswires, Fortinet intends to use the IPO to raise up to $100 million. The proceeds would be used to develop products and potentially to make acquisitions.

Fortinet is a leader in the intensely competitive and highly fragmented market for Unified Threat Management (UTM), an all-in-one-box approach to Internet security that involves cramming defenses for email, web traffic, and intrusions and hacking into a single appliance.

The benefit to such an approach, which appeals primarily to small- and medium-size business (SMBs) as well as to some branch offices, is that it is easier to manage and less expensive than an array of specialized point products. The drawback is that the buyer must sometimes sacrifice solution depth in favor of breadth. Put another way, you rarely get the best of everything in an all-in-one security appliance, but you at least get protection for each type of vulnerability.

Although Internet-security products have not proven completely immune to the global downturn, the market for them has not cratered, with most customers in the corporate world continuing to buy and update security offerings.

After some ups and downs, Fortinet’s financial performance has stabilized and become more predictable. In the first half of 2009, according to Dow Jones, the company’s loss narrowed to $916,000 from $5.1 million while revenue increased 15% to $115.5 million.

Fortinet has disclosed neither the exchange on which it intends to trade its share nor the symbol under which those shares will trade. The proposed IPO’s lead underwriters are Morgan Stanley, J.P. Morgan Securities & Co, and Deutsche Bank Securities. Robert W. Baird & Co., RBC Capital Markets Corp., ThinkEquity LLC, JMP Securities LLC and Signal Hill Capital Group LLC will serve as co-managers.

In five rounds of venture funding, Fortinet raised more $100 million Redpoint Ventures, DCM-Doll Capital Management, Acorn Campus, DEFTA Partners, Fortunetech Partners, LLC., Forval Creative Inc., and Meritech Capital Partners.

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