PCNSA Topics - Palo Alto Networks Certified Network Security Administrator Updated: 2024

Palo Alto (pronounced /ˌpæloʊˈæltoʊ/, from Spanish: palo: "stick" (or "branch") and alto: "high") is a California charter city located in the northwest corner of Santa Clara County, in the San Francisco Bay Area of California, USA. It is named after a tree called El Palo Alto. The city includes portions of Stanford University and is headquarters to a number of Silicon Valley high-technology companies, including Hewlett-Packard, VMware and Facebook. As of the 2000 census, the city had a total population of 58,598 residents.

Earliest recorded history stems from 1769, when Gaspar de Portolà noted an Ohlone settlement. This remains an area of known Indian mounds. A plaque is erected at Middlefield Road and Embarcadero Road to commemorate this area.

The city got its name from a tall tree, El Palo Alto, by the banks of the San Francisquito Creek bordering Menlo Park. You can still find half of this tree (the other half was destroyed when the creek flooded) along the foot bridge on Alma Street. A plaque recounts the story of a 63 man, 200 horse expedition from San Diego to Monterey from November 7–11, 1769. The group overshot and reached the San Francisco Bay instead. Thinking the bay was too wide to cross, the group decided to turn around near 'el palo alto.'

'We are committed to the highest standards of ethical and legal conduct, and expect our employees to adhere to these same standards,” Palo Alto Networks said in a statement. 'This issue involved two non-executive level employees and two contractors, who were either terminated or had previously left the company. Palo Alto Networks has not been charged in any of these actions.’

A former Palo Alto Networks IT administrator was indicted Tuesday and accused of spearheading an insider trading scheme that allegedly generated $7 million in illegal profits.

A federal grand jury indicted Janardhan Nellore, 42, on one count of conspiracy to commit securities fraud, six counts of securities fraud, and three counts of aggravated identity theft for reportedly using his IT credentials and work contacts to obtain highly confidential information about Palo Alto Networks’ quarterly earnings and financial performance.

He then allegedly either traded the company’s securities based on the confidential information or tipped off four of his friends, who also traded based on the information. Nellore was tasked with supporting Palo Alto Networks’ internal financial databases as an IT administrator from 2012 until his termination in 2019. Three of the four friends also had ties to Palo Alto Networks as an ex-employee or ex-contractor.

[Related: Palo Alto Networks Stockholders Again Oppose Executive Pay Packages]

“Corporate insiders who abuse their access to inside information for personal gain will face the consequences for their actions, whether they sit in the executive suite or the IT department,” U.S. Attorney David Anderson said in a statement. “The integrity of our financial markets requires everyone to follow the rules.”

An alleged accomplice and formed Palo Alto Networks contractor, Sivannarayana Barama, 45, was also indicted on conspiracy to commit securities fraud and securities fraud. Each of those charges carries a maximum sentence of 25 years in prison and a $250,000 fine, while the aggravated identity theft charges carry a maximum sentence of two years in prison and a $250,000 fine.

In addition to the criminal indictments, the U.S. Securities and Exchange Commission filed insider trading charges in civil court against Nellore, Barama and the three other alleged co-conspirators—Ganapathi Kunadharaju, 41; Saber Hussain, 42; and Prasad Malempati, 50. Malempati was employed by the Palo Alto Networks IT group from 2013 to 2016, while Hussain was previously a contractor for the company.

“We are committed to the highest standards of ethical and legal conduct, and expect our employees to adhere to these same standards,” Palo Alto Networks said in a statement. “This issue involved two non-executive level employees and two contractors, who were either terminated or had previously left the company. Palo Alto Networks has not been charged in any of these actions.”

Palo Alto Networks said it has been and is continuing to fully cooperate with authorities. The company’s stock was down 67 cents, or 0.29 percent, in after-hours trading Thursday to $230 in after-hours trading Tuesday.

Lawyers for Nellore, Barama and Hussain could not immediately be reached for comment by either CRN or Reuters. Kunadharaju’s counsel told Reuters his client has been fully cooperating with the SEC and is optimistic about the outcome, while a lawyer for Malempati noted to Reuters that his client is not in custody even though Nellore has been in custody since May of this year.

After Nellore was interviewed by the FBI on May 7 in connection with the investigation, prosecutors allege he purchased one-way tickets to New Delhi, India, for himself and his family on a flight departing the very next morning. FBI agents reportedly intercepted Nellore while he was trying to board the flight. At that point, prosecutors said Nellore was detained as a flight risk.

Following Nellore’s promotion in 2015, he became one of just five individuals with the highest level of access to Palo Alto Networks’ Systems, Applications & Products in Data Processing database, which was essential to the process by which the company determined its quarterly financial results, such as revenue, so that it could report those results publicly, according to the SEC complaint.

As a result, Nellore reportedly had access to nonpublic information about Palo Alto Networks’ quarterly financial performance, including target and actual billings, bookings and growth rate. He is accused of trading the company’s securities using inside information through “straddle trades,” where he put options before earnings announcements and sold the options after the announcements.

“The defendants unlawfully made millions of dollars by concocting a complex trading scheme using valuable inside information to profit by trading ahead of authorized disclosures to the investing public,” FBI Special Agent in Charge John Bennett said in a statement. “By arresting these individuals, we set a clear example that we will not tolerate those who undermine the integrity of the markets and fair trade.”

The U.S. Attorney’s office alleges that Nellore and his four friends placed approximately 800 straddle trades on Palo Alto Networks securities between March 2015 and September 2018, generating illegal profits in excess of $7 million. When making non-straddle trades of Palo Alto Networks securities or trading in other stocks, prosecutors allege the five co-conspirators lost money.

To evade detection, the SEC alleges that Nellore insisted the insider trading ring use the code word “baby” in texts or email about Palo Alto Networks’ stock, advising they “exit baby” or “enter few baby.” The complaint also claims that certain traders kicked back profits to Nellore in small cash transactions intended to avoid bank scrutiny and reporting requirements.

“Nellore and his friends exploited Nellore’s access to valuable earnings information and attempted to hide their misconduct using code words and carefully tailored cash withdrawals,” SEC San Francisco Regional Office Director Erin Schneider said in a statement. “This case highlights our use of enhanced data analysis tools to spot suspicious trading patterns and identify the traders behind them.”

When the Palo Alto City Council returns from its winter break in January, it will continue the city's long-standing tradition by choosing one of its seven members as the city's mayor for the coming year.

Unlike in year's past, however, the council also plans to delve into a politically thorny question: Should this tradition be modified or even outright abolished?

Like in many cities in Santa Clara County, a mayor in Palo Alto serves a largely (but not entirely) ceremonial role. They run council meetings, cut ribbons at ground-breaking ceremonies, appoint members to committees and represent the city at regional, state and national conferences.

Some on the council, however, believe that it's time to reconsider the mayor's role. Council members Vicki Veenker and Greg Tanaka, who both serve on the council's Policy and Services Committee, suggested in May that the city would benefit from longer mayoral terms. On Dec. 18, the full City Council agreed to hold this discussion in early 2024.

Veenker suggested at the Dec. 18 meeting that broader societal shifts may warrant changing the city's policy for choosing its mayor, which is enshrined in the City Charter.

"The Congress is fairly dysfunctional and the role of cities is rising," Veenker said. "I think Palo Alto needs to talk about how it participates in this conversation.

"One of the things that cities that have mayors who stick around longer than a year have is some continuity in relationship with election officials in other cities, in other levels of government and organizations, like the U.S. Conference of Mayors and others."

Around Santa Clara County, the Palo Alto model of electing a council member as a mayor for a year is more of a rule than an exception. Most of the county's smaller cities have procedures in which council members choose one of their own to serve as mayor for one year, whether through a popularity contest or through a regular rotation. This includes the cities of Mountain View, Saratoga, Los Altos, Los Gatos, Campbell and Cupertino.

Others do things differently. Morgan Hill residents elect their mayor for a two-year term. In San Jose, Santa Clara and Sunnyvale, mayors are directly elected to four-year terms.

If the city opts to make a change, it would need to bring the issue to the voters during an election year in which council members are also on the ballot. As such, the discussion will not affect next month's proceeding, in which the council will likely follow its informal tradition of choosing vice mayors to serve as next year's mayors and elevate Greer Stone to its top leadership post.

It could, however, have bearing on when, how and by whom future mayors would be chosen. Tanaka argued during the May meeting of the Policy and Services Committee that they should be chosen directly by the voters.

"I think having a directly elected mayor is a good thing because it gives authority to the mayor, versus if we just elect ourselves," Tanaka said.

He also suggested that having a mayor serve in the position for multiple years would make it easier for the chosen person to fulfill the goals they were elected to achieve.

"It's really hard to get something done in one year. It's extremely hard," Tanaka said.

It's also entirely possible — and, in fact, quite likely — that the council will retain its current model. Veenker was the only council member during the Dec. 19 hearing who expressed some urgency about changing the status quo. City Manager Ed Shikada also indicated that city staff has little appetite for offering any recommendations or opinions on this topic, which goes to the heart of how city residents want to be represented and which he argued should be handled by the council itself.

"Quite frankly, I think it's fraught with peril for us as staff to try to articulate the pros and cons of a governance question of this nature," Shikada told the council.

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Palo Alto is a California charter city located in the northwest corner of Santa Clara County, in the San Francisco Bay Area of California, United States. The city shares its borders with East Palo Alto, Mountain View, Los Altos, Los Altos Hills, Stanford, Portola Valley, and Menlo Park. It is named after a redwood tree called El Palo Alto.

‘I principally do not believe in having two products in the same category because there is confusion, it destroys the strategy and creates lots of unnecessary kerfuffle in the organization,’ says CEO Nikesh Arora.

Palo Alto Networks doesn’t plan to pursue any more large acquisitions after spending a whopping $3.46 billion on 12 megadeals since 2018.

The Santa Clara Calif.-based platform security vendor has needed to be careful when probing potential acquisition targets since Palo Alto Networks already has a product in pretty much every category where it wishes to play, said Chairman and CEO Nikesh Arora. Any deals in spaces where the company already has a product would lengthen the integration process and create uncertainty for customers, Arora said.

“I principally do not believe in having two products in the same category because there is confusion, it destroys the strategy and creates lots of unnecessary kerfuffle in the organization,” Arora told Wall Street investors Monday. “So that’s why our opportunities to go expand in categories is limited.”

[Related: Palo Alto Networks Nabs Barracuda Networks CEO BJ Jenkins As President]

Arora said there are certain security categories like identity where Palo Alto Networks isn’t looking to play, so even if there are potential acquisition targets in the space, the company isn’t biting. Palo Alto Networks has decided to focus its investments on three areas where the company believes it will be the market leader, according to Arora: cloud security, SOC automation, and network firewalls.

“At this time, we believe we have assembled the key pillars needed to execute on our platform strategy,” Chief Financial Officer Dipak Golechha told investors Monday. “We expect only incremental M&A activity in fiscal year ‘22 as compared to the recent past.”

There were many high-growth cybersecurity sectors such as Secure Access Service Edge (SASE) and cloud security where Palo Alto Networks wasn’t a player when Arora joined the company in June 2018. Palo Alto Networks additionally wasn’t a full player in the Security Operations Center (SOC) or Extended Detection and Response (XDR) at the start of Arora’s tenure, according to Arora.

The cost and time required to organically build capability in cloud security, SASE, XDR and SOC would have taken Palo Alto Networks four-to-five years, Arora said. As a result, Palo Alto Networks determined that scouring the market for the best-in-class players in key categories and buying them was the right approach. Three years and 12 deals later, he said Palo Alto Networks has coverage in those categories.

“Does it mean we might tuck in a product company [acquisition] here or there? Yes,” Arora said. “But it also means that we’re not looking for substantive acquisitions at this current point in time.”

Those acquisitions have paid dividends, Arora said, with much of Palo Alto Networks’ next-generation security billings coming from inorganic capabilities that have been integrated into the company’s platform. There are parts of the acquisitions where Palo Alto Networks would like to see more traction and is focusing more investment, but for the most part, he said the acquired assets have been digested.

Palo Alto Networks’ largest transactions include: the $800 million buy of attack surface management vendor Expanse in October 2020; the $560 million buy of analytics and automation vendor Demisto in February 2019; and the $420 million purchase of SD-WAN player CloudGenix in March 2020. But the company hasn’t made any deals since February, when it announced the $156 million buy of Bridgecrew.

“We’re building lots and lots more data capability in the last few years,” Arora said. “It’s all showing up hopefully in the billings that you’re seeing that we’re able to provide more capability to our customers.”

Palo Alto Networks sales for the quarter ended July 30 jumped to $1.22 billion, up 28.3 percent from $950.4 million a year ago. That beat Seeking Alpha’s estimate of $1.17 billion.

The company recorded a net loss of $119.3 million, or $1.23 per diluted share, 102.5 percent worse than a net loss of $58.9 million, or $0.61 per diluted share, the year before. On a non-GAAP basis, net income jumped to $161.9 million, or $1.60 per diluted share, up 11.7 percent from $144.9 million, or $1.48 per diluted share. That crushed Seeking Alpha’s net income projection of $1.44 per diluted share.

Palo Alto Networks’ stock soared $37.93 (10.18 percent) to $410.50 per share in after-hours trading Monday. That’s the highest the company’s stock has ever traded since going public in July 2012.

On a full-year basis, revenue skyrocketed to $4.26 billion, up 24.9 percent from $3.41 billion a year earlier. Net loss for the fiscal year worsened to $498.9 million, or $5.18 per diluted share, 86.9 percent larger than a net loss of $267 million, or $2.76 per diluted share, the year prior.

Subscription and support revenue for the quarter leapfrogged to $879.9 million, up 36.5 percent from $644.8 million last year. Product revenue for the quarter climbed to $339.4 million, up 11.1 percent from $305.6 million the year prior.

For the coming quarter, Palo Alto Networks expects diluted non-GAAP net income of $1.55 to $1.58 per share on total sales of $1.19 billion to $1.21 billion. Analysts had been expecting non-GAAP earnings of $1.60 per share on total revenue of $1.15 billion, according to Seeking Alpha.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

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In looking through the thousands of photos the Palo Alto Weekly visual journalist and contributing photographers captured in 2023, something became glaringly apparent: For the first time since 2020, the photos were not dominated by our community's response to COVID-19. There were no images of long lines outside vaccination centers and none showing students sitting socially distanced in classrooms or masked shoppers in stores.

Instead, there were photos of neighbors filling sandbags to protect each other's homes from flooding by relentless winter storms in January and folks dancing and cheering at the Lunar New Year Celebration hosted by Avenidas Chinese Community Center.

Others showed new City Council members being sworn in to office in-person and local students working together to build a solar car from scratch.

Toward the end of the year, there were images showing locals supporting one another at a pro-Israel solidarity gathering at the Oshman Family JCC in October.

These images reflect the breadth of moments we've experienced over the past 12 months. Take a final glance back.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.