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Palo Alto shares soar 31 percent on NYSE debut
(Reuters) - Shares of Palo Alto Networks Inc soared 31 percent on their market debut on the New York Stock Exchange on Friday, as investors bet on the growth of the enterprise software market.
The Santa Clara, California-based company, which makes security software for businesses, opened to trade at $55.15, after shares were priced at $42 apiece a day earlier, above their expected range. In late morning trading Friday, shares gained even more, adding 33 percent to $56.03.
Palo Alto's 6.2 million shares were priced late Thursday, raising $260.4 million. Earlier this week, the company had raised its price range to $38 to $40 from a range of $34 to $37.
Palo Alto's IPO comes on the heels of a successful offering from IT management services provider ServiceNow Inc last month. ServiceNow's public debut helped open an IPO market that was effectively frozen for a month following Facebook Inc's botched offering.
Besides Palo Alto, other IPOs that priced this week include online travel company Kayak Software Corp, teen retailer Five Below Inc and pharmaceutical company Durata Therapeutics Inc. The offerings raised a total of $606.9 million. Guitar maker Fender Musical Instruments Corp pulled its IPO Thursday, citing market conditions.
Palo Alto sells firewalls to companies that block out malware and viruses.
"We have some pretty aggressive ambitions as far as growing into our market opportunity," CEO Mark McLaughlin said in an interview on Friday. "This is a $10 billion market and we have a 2 to 3 percent market share."
McLaughlin was formerly the CEO of Internet infrastructure services provider VeriSign Inc.
In fiscal 2011, Palo Alto's revenue more than doubled to $118.6 million. The company reported a net loss of $12.5 million, down from $21.1 million a year earlier.
Palo Alto offered 4.7 million shares during the IPO, while existing shareholders offered 1.5 million. The company's backers include Greylock Partners, Sequoia Capital and Globespan Capital Partners.
Morgan Stanley, Goldman Sachs and Citigroup are the lead underwriters of the offering.
(Reporting by Olivia Oran; Editing by Bernadette Baum)
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