Integrated Security Appliances, Integrated Security Management and Managed
Security Services Touted as Hot Segments at Security IPO Summit at RSA
Conference 2004
SAN FRANCISCO, RSA CONFERENCE 2004, Feb. 26 /PRNewswire/ -- A panel of
financial industry experts highlighted key market segments, candidate criteria
and the current market climate for potential 2004 security market initial
public offerings at the first annual Security IPO Summit held yesterday at RSA
Conference 2004. Co-hosted by network security innovators Fortinet,
CipherTrust and NetScaler, the event was a frank discussion by a panel of
financial market experts representing investment banking, equity fund
management and equity research analysis. The panel presented a diverse range
of views but indicated substantial agreement that the accelerating market for
IPOs in 2004 will not cause a flurry of new security equity offerings, but
rather will open the window for a small number of companies in key segments
with solid businesses and strong management teams.
Alex Vieux, publisher and CEO of Red Herring Online, moderated the panel,
which featured Walter Pritchard, vice president and senior research analyst,
Schwab SoundView Capital Markets, Israel Hernandez, senior vice president and
senior equity research analyst, Lehman Brothers, Gary Kirkham, managing
director, technology investment banking, Merrill Lynch & Co. and Avi
Satwalekar, research analyst/portfolio manager, Franklin Templeton
Investments.
The panelists agreed that the success of new IPOs will depend on several
tangible and intangible criteria. The financial markets are now demanding that
companies be able to show a large and growing market opportunity, sustainable
business model, critical mass, significant customers, well-defined sales
channels, meaningful revenues with significant international exposure and a
complete, proven management team. This is in stark contrast to IPOs during the
"Dot Com Bubble," during which immature companies with unproven business
models, limited overall market opportunities and inexperienced management
teams lead to post-IPO business challenges and often disappointing results.
"Today is a much different market than we saw in 1999 to 2000," said
panelist Gary Kirkham. "Back then, companies with weak fundamentals left a bad
taste with investors. Today, better companies are filling out the next wave
of IPOs. Many security segments are still defining themselves, but have unique
characteristics not found in more mature markets."
IPO Security Summit Highlights
In addition to highlighting key criteria to look for in IPO candidates,
several other important trends were revealed at the Summit:
-- Investors are showing renewed interest in IPOs: In 2002 there were four
IPOs and in 2003 there were nine IPOs. Already in 2004, there are 14
IPOs in the pipeline.
-- Despite a down economy, the security segment has been resilient and is
expected to remain so in 2004.
-- Among publicly traded companies, security companies currently command
the highest valuation multiples relative to sales and earnings versus
any other tech market segment.
-- Some 300 companies in the security market have been funded in the last
several years. Most of these will not be able to reach the public
equity markets and will need to seek acquisition by larger industry
"consolidators."
-- Approximately two to six currently private companies in the security
segment can be expected to complete IPOs in 2004.
Event sponsors CipherTrust, NetScaler and Fortinet, have been recognized
for exhibiting many of the key IPO criteria highlighted by the panelists. For
example, Fortinet, a manufacturer of integrated, hardware-based security
platforms, has taken advantage of the enterprise market's growing need to
combat evolving security threats. This global challenge represents a market
opportunity that is only just beginning to be tapped. The company is
generating revenue across all three major international geographies, has grown
at 50-100% per quarter over the last seven quarters, and continues to gain
marketshare from existing players. Fortinet was founded by Ken Xie, who also
founded NetScreen.
Recapping the session, panel moderator Alex Vieux said: "The appetite is
there by the financial community for people to buy into security IPOs.
Companies must show that they will not be great just for today, but also great
two to three years from now and beyond. Based on what our panel has said, we
can expect perhaps a half dozen security IPOs in 2004, and one or two will be
big winners. Some of these companies could well be drawn from the sponsors of
today's event."
About Fortinet (http://www.fortinet.com)
Fortinet's award-winning FortiGate(TM) series of ASIC-accelerated
antivirus firewalls, winner of the 2003 Networking Industry Awards Firewall
Product of the Year, are the new generation of real-time network protection
systems. They detect and eliminate the most damaging, content-based threats
from email and Web traffic such as viruses, worms, intrusions, inappropriate
Web content and more in real time -- without degrading network performance.
FortiGate systems, the only security products that are quadruple-certified by
the ICSA (antivirus, firewall, IPSec, NIDS), deliver a full range of
network-level and application-level services in integrated, easily managed
platforms. Named to the "Visionaries" category in the 2003 Gartner Enterprise
Firewall Magic Quadrant, Fortinet is privately held and based in Sunnyvale,
California.
About CipherTrust
Headquartered in Atlanta, CipherTrust, Inc. is a global email security
company, setting new standards in the development of comprehensive security
solutions for enterprise email systems. The company's IronMail appliance is
the only product on the market offering an integrated set of best-of-breed
security solutions, including spam protection, virus prevention, intrusion
detection and flexible policy controls. CipherTrust's IronMail provides a
secure email gateway for the enterprise, and earned PC Magazine's Editors'
Choice Award for corporate anti-spam tools. For more information about
CipherTrust, visit http://www.ciphertrust.com or call 877-448-8625.
About NetScaler
NetScaler provides networking systems that enable the fast and secure
delivery of applications over web-based networks. Uniquely integrating
application-layer security, optimization and switching capabilities,
NetScaler's 9000 Series optimizes the application performance and security of
many of the world's largest data centers and websites, while greatly reducing
cost of ownership. NetScaler headquarters are in Santa Clara, California, and
the Company's products are available both direct and through a variety of
channel partners globally. For more information, visit
http://www.netscaler.com .
SOURCE Fortinet, Inc.
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Related links:
http://www.fortinet.com
CONTACT:
Roger Fortier, rogerf@mcgrathpower.com, or
Amy Barney, amyb@mcgrathpower.com, both of McGrath/Power Public
Relations, +1-408-727-0351, for Fortinet, Inc.; or Michelle
Spolver of Fortinet, Inc., +1-408-235-7700, or
mspolver@fortinet.com
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