Security is sexy again.
It's not 1999, but technology IPOs are gradually coming back into vogue, and the latest is packing a punch. Fortinet (FTNT), a Silicon Valley network security provider, ran out the gate with a head of steam this morning, popping as much as 40 percent from its initial price of $12.50 a share.
By taking itself public, Fortinet raised $156 million dollars, while making its employees a whole lot wealthier than they were last week -- the classic Silicon Valley wealth engine that's seemed stalled for much of the past decade.
With a market that's understandably skittish about new stocks, Fortinet still represents a potentially good buy. It's in the security business, specifically spam filtering and firewalls. Very big areas these days, what with computer security issues in the headlines regularly.Established players in the game, like Symantec and McAfee, have shown strong stock performance as people continue to buy security software for their homes and businesses.
Fortinet is also profitable. This is not brand new dotcom trying to raise money for the first time. Fortinet is already in the black, was founded back in 2000, and has clearly established itself as a successful security player.
So what does its IPO mean for the Web 2.0 guys -- like Digg, whose CEO recently told the Wall Street Journal that he wasn't worried about the fact that his company still wasn't profitable? Not much, probably. This offering is good news if you're a solid company turning a profit. There is a demand out there for shares in your company.
As for the Facebooks, Twitters, Diggs, etc.? They'll probably stick to their guns for awhile, and get to the point where they, too, can be seen as a (at least somewhat) secure investment. Because that -- and not social networking buzzwords -- is what investors find sexy.