The IPO Buzz: IPOs Above the Clouds

Topping this list is Fortinet (NADSAQ: FTNT – proposed), according to the IPO experts. But Cloud Peak Energy (NYSE: CLD – proposed) could also fly right at take-off.
 
Fortinet, based in Sunnyvale, California, is a provider of network security offering broad, integrated and high- performance protection against dynamic security threats to enterprises, service providers and government agencies. The company believes it is the leading worldwide provider of Unified Threat Management appliances (UTM), with a 15.4 percent share of the UTM appliance market for the second quarter of 2009, as reported by IDC Worldwide Security Appliances Tracker.
 
Formed in 2000, Fortinet turned profitable for the first time with the three months ended Sept. 28, 2008, when it reported net income of $4.5 million on total revenues of $54.4 million.
 
Fast forward to the recent three months ended Sept. 30, 2009. Fortinet reported net income of $7.9 million on total revenues of $65.9 million.
 
Fortinet’s industrial sector, the Dow Jones U.S. Software & Computer Services Index, has greatly outperformed the stock market this year as measured by the S&P 500. Consider the following:
  • On Friday, Nov. 13, the Dow Jones U.S. Software & Computer Services Index closed at 681.40, UP 53.7 percent from 443.43 on Dec. 31, 2008.
  • On Friday, Nov. 13, the S&P 500 closed at 1,093.48, UP 21.1 percent from 903.25 on Dec. 31, 2008.
Fortinet plans to price 12 million shares at $9 to $11 each on Tuesday evening for Wednesday’s trading. The company will offer about 5.8 million shares and selling shareholders will offer about 6.2 million shares.
 
Cloud Peak Energy (NYSE: CLD – proposed), based in Gillette, Wyoming, believes it is the third-largest producer of coal in the United States and in the Powder River Basin (PRB), a region located in northeastern Wyoming and southeastern Montana. The company operates two of the five largest coal mines in the PRB region and in the United States. The company’s operations include three wholly-owned surface coal mines — two in Wyoming and one in Montana.
 
Before the offering, Cloud Peak Energy plans to acquire an interest in Rio Tinto America’s Western U.S. coal business (other than the Colowyo Mine). The company plans to use the net proceeds from this offering to finance the acquisition from Rio Tinto America.
 
The company’s numbers made for interesting reading. Consider the following:
 
For the nine months ending Sept. 30, 2009, Cloud Peak reported net income of $190.1 million on revenues of $1.06 billion, compared with net income of $25.8 million on revenues of $904.6 million for the same period a year ago.
 
Cloud Peak Energy’s industrial sector, Dow Jones U.S. Coal Index, has been soaring.
  • On Friday, Nov. 13, the Dow Jones U.S. Coal Index closed at 312.76, UP 96.3 percent from 159.34 on Dec. 31, 2008.
  • On Friday, Nov. 13, the S&P 500 closed at 1,093.48, UP 21.1 percent from 903.25 on Dec. 31, 2008.
Cloud Peak Energy plans to price 30.6 million shares at $16 to $18 each on Thursday evening for Friday’s trading. The company will be offering all 30.4 million shares.
 
And should all six hatchlings get out of the IPO nest this week, it will be the second-busiest one of 2009, according to the U.S. Securities and Exchange Commission filings. The busiest was for the week ended Sept. 25, when seven IPOs took flight. They raised $2.87 billion.
 
 
Disclosure: Neither the author nor anyone else on the IPOScoop staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations and opinions.