Fortinet shares soar on first day of trading after IPO prices higher than expected

Fortinet shares soar on first day of trading

NEW YORK — Shares of Fortinet Inc. rose sharply in the company’s first day of trading on the Nasdaq, another sign that the recently moribund IPO market is coming back to life.

The network security provider priced its initial public offering of 12.5 million shares at $12.50 each, above the expected range of $9 to $11 apiece.

Investors bid shares up $4.12, or 33 percent, to close at $16.62 in trading Wednesday.

Renaissance Capital research analyst Eric Guja said the stock’s strong performance shows “there still a market for those traditional growth stories.”

Fortinet’s IPO on Wednesday — one of seven so far this month, according to Renaissance Capital — raised about $156.3 million in total. There was just one IPO in the entire fourth quarter of 2008 after the market seized up during the financial crisis.

Fortinet Inc., based in Sunnyvale, Calif., provides unified threat management systems, which combine security functions such as antivirus and firewall protection for computer networks.

Its sales have grown from $38.7 million in 2004 to $211.8 million last year. After racking up losses, the company became profitable in the third quarter of 2008.

Market research firm IDC puts Fortinet’s share of the unified threat management market at a little more than 15 percent. And the firm predicts the overall market will reach $3.5 billion in sales by 2012, up from $1.3 billion two years ago.

The company sold 5.8 million shares, bringing in $72.5 million, which it plans to use for general corporate purposes.

Fortinet’s private shareholders sold another 6.7 million for $83.8 million, but those proceeds won’t go to the company.

Several other IPOs are expected this week including Archipelago Learning Inc., a provider of educational programs, and coal producer, Cloud Peak Energy Inc., a subsidiary of Rio Tinto PLC.