Cisco Systems landed on the SV150 list for the first time in 1991, took the top spot in the networking sector from 3Com exactly 20 years ago, and has been the biggest networking company in Silicon Valley every year since.
But the San Jose giant has some fresh competition.
Networking companies make up nearly one-fifth of the SV150, at 28 companies, and as a group they boosted sales 3 percent in 2014 and saw profits drop 14 percent. Potential future gains are expected to top this, however, as evidenced by the collective Wall Street valuation growing 23.6 percent. Most of that growth in market capitalization can be attributed to two groups: companies peddling network security amid a scourge of data breaches, and a new crop of networking-equipment manufacturers.
Network-security software companies have stormed the sector in the past five years: Fortinet joined in 2010; Palo Alto Networks and Infoblox arrived in 2013; and FireEye, Infoblox and Barracuda Networks made the list last year for the first time. As large companies suffer highly publicized network breaches — think Target, Anthem and Sony Pictures — they rely on these companies to find their weaknesses and help build better defenses.
FBR Capital Markets analyst Daniel Ives said this convergence of new high-tech security solutions and surging demand for their services is creating “a once-in-a-multi-decade secular opportunity in terms of cybersecurity.”
In the more traditional networking-equipment field, two fresh companies have arrived on the SV150 in 2015, with Arista Networks and A10 Networks making the list in their first opportunities after 2014 initial public offerings thanks to equipment that caters to companies that want high-speed connections. Santa Clara-based Arista is especially impressive, landing in the top 100 at No. 78, two spots behind another networking upstart that has been around longer, Ubiquiti Networks.
Cisco has taken notice, suing Arista — which is run by former Cisco executives — for patent infringement in a legal battle that will take the networking sector’s tug-of-war between traditional heavies and hot newcomers into the courtroom.
Contact Jeremy C. Owens at 408-920-5876. Follow him at Twitter.com/jowens510.