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Palo Alto Networks settles Juniper patent fight, stocks on the rise

The cybersecurity firm settled with Juniper for $75 million in cash and roughly $100 million in stock, prompting a 13 percent spike in Palo Alto's stock.
Written by Natalie Gagliordi, Contributor

Palo Alto Networks' stocks are surging Thursday following news that the firewall security company settled its patent fight with Juniper Networks for $75 million in cash and roughly $100 million in stock. 

It was just this past March when a Delaware judge declared a mistrial in a legal battle where Juniper claimed Palo Alto's application firewalls infringed on a number of Juniper's technical patents. If Juniper had proven its case, Palo Alto could have been banned from selling its next-generation firewalls.

With that draconian scenario averted and a financial arrangement agreed upon, the companies have dismissed all litigation and entered into a covenant not to sue each other for patent infringement for eight years. In addition, both parties will license the patents that were at the heart of the litigation, for the duration of the patent lifecycles.

Palo Alto's stocks subsequently jumped 13 percent in premarket trading Thursday.

The settlement was announced Wednesday as Palo Alto reported its fiscal third quarter earnings, coming in strong across all major operating metrics.

The cybersecurity firm earned 11 cents a share on a revenue of $150.7 million. Analysts had expected an average of 10 cents a share on revenue of $146.1 million.

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Mark McLaughlin, president and chief executive officer of Palo Alto Networks, said in prepared remarks:

We reported record revenue in our third quarter driven by strong customer demand for our next-generation enterprise security platform. We achieved the highest rate of new customer acquisition in our history and now serve more than 17,000 customers globally to address their security needs and prevent increasingly sophisticated and complex cyber attacks from compromising an organization's critical assets. We also announced this afternoon that we have reached a settlement with Juniper Networks of all litigation matters between us; this allows us to further focus our resources and time on our customers and growing our business.

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