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Originally published Tuesday, November 17, 2009 at 12:16 PM

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Computer security co. Fortinet plans IPO this week

Fortinet Inc. plans to go public Wednesday in an initial public offering, giving investors a chance to tap a network security provider with sales expected to grow.

The Associated Press

NEW YORK —

Fortinet Inc. plans to go public Wednesday in an initial public offering, giving investors a chance to tap a network security provider with sales expected to grow.

If shares price at the top end of their projected range of $9 to $11, the IPO could be valued at $137.5 million, or more if the offering's underwriters exercise their overallotment options.

Fortinet's line of business is unified threat management - offering various security functions, such as antivirus and firewall protection, in one package. The market research firm IDC pegs Fortinet's share of the unified threat management market at a little more than 15 percent. The firm expects the overall market to reach $3.5 billion in sales by 2012, up from $1.3 billion in 2007.

Fortinet said it will issue roughly 5.8 million shares. At the midpoint of the expected pricing range, the IPO would bring the company estimated proceeds of $52.4 million. The company plans to use the proceeds for general corporate purposes.

Company insiders plan to offer another 6.7 million shares, up from a previously announced 6.2 million, according to a filing with the Securities and Exchange Commission. The company will not receive proceeds from those shares. The integrated approach is intended to simplify management and cut costs.

David Menlow, president of IPOfinancial, said the public offering should be a straightforward opportunity for investors. "The growth rate of the company continues to improve," he said. "There's no rocket science with this."

Fortinet, based in Sunnyvale, Calif., said its revenue climbed from $38.7 million in 2004 to $211.8 million last year.

The company breaks its revenue into two categories: Product revenue, the biggest segment, includes one-time sales of security hardware and software. Services revenue includes subscriptions to antivirus, Web filtering and other programs.

The company says it became profitable in the third quarter of last year and has remained in the black since then. It posted net income of $7.4 million for 2008.

The IPO's underwriters, Morgan Stanley, JPMorgan, and Deutsche Bank, have the option to buy up to 1.9 million additional shares to cover overallotments.

Fortinet plans to trade on the Nasdaq exchange under the ticker symbol "FTNT."

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