Why Fortinet, Inc. Shares Plunged
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Fortinet, Inc. fell by more than 12% Friday after the network security specialist unexpectedly announced the departure of its chief financial officer.
So what: According to Fortinet's press release, now-former CFO Ahmed Rubaie has resigned "for personal reasons" after just seven months in the role. Rubaie has already been replaced by Nancy Bush, but will "remain available on a reasonable basis" through March 5, 2014 to assist with the transition.
Bush, for her part, served as vice president and worldwide corporate controller of Fortinet since December 2011, and also previously stepped in as interim CFO for the company from September 2012 to April, 2013.
Now what: As it stands, while investors are rightly surprised by the announcement -- which was released after the market close Wednesday -- Rubaie's decision doesn't appear to have been influenced by any pervasive issues with Fortinet's actual business.
To the contrary, Fortinet's founding CEO Ken Xie assured investors, "Although most of our quarterly sales are closed in the last few weeks of each quarter, based on where we stand today we are currently tracking well to guidance targets and feel confident in our business."
As a result, even with Fortinet stock trading around 30 times next year's estimated earnings, I think today's pullback could serve as a great buying opportunity for patient long-term investors.
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The article Why Fortinet, Inc. Shares Plunged originally appeared on Fool.com.Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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