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Palo Alto Networks Clinches Ericsson Deal as Customer Wins Mount

Palo Alto Networks Inc. (PANW) is winning 85 percent of deals it bids for, and has signed Ericsson AB (ERICB) as a new client, according to documents obtained by Bloomberg.

The disclosures will come at a presentation at the company’s inaugural analysts’ conference starting at 8 a.m. tomorrow in New York. The network-security provider, which held an initial public offering in July, will also announce that it’s the primary firewall provider for more than three-quarters of its new customers, the documents say.

Palo Alto, co-founded in 2005 by former Check Point Software Technologies Ltd. (CHKP) executive Nir Zuk, is going head-to- head in the network-security market with Check Point as well as Cisco Systems Inc. (CSCO) and Juniper Networks Inc. (JNPR) Palo Alto’s revenue is rising faster than rivals as businesses seek to protect themselves from sophisticated hacking attacks that older security technologies have struggled to stop.

The enterprise firewall market will expand 11 percent this year to $7.7 billion, according to a Feb. 7 report from researcher Gartner Inc. Check Point and Palo Alto offer the top products in the market, based on their quality and support, Gartner said.

Palo Alto first sold shares to the public on July 19, 2012, and saw its market value jump 71 percent during the next seven weeks. The stock has since declined 22 percent to $55.93, giving the company a market value of $3.87 billion.

Revenue Gains

Palo Alto said on its earnings call that the company added more than 1,000 customers for the fifth straight quarter, and now has more than 11,000 clients. Ericsson, the world’s largest maker of wireless networks, marks another win in the Europe, Middle East and Africa region, which accounted for 25 percent of Palo Alto’s revenue in the latest quarter.

Mike Haro, a spokesman for Santa Clara, California-based Palo Alto, and Jimmy Duvall, a spokesman for Stockholm-based Ericsson, declined to comment.

Gartner said one of Palo Alto’s weaknesses is that it doesn’t have technology in related markets, such as antivirus and security management, so it can’t sell bundled products.

Still, revenue climbed 70 percent to $96.5 million in the latest quarter, which ended in January. That compares with growth of 5 percent at Cisco, 3.3 percent at Check Point and 1.8 percent at Juniper in their most recent quarters.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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