Mad Money

Former SoftBank and Google exec Nikesh Arora talks taking over Palo Alto Networks with outgoing CEO

Key Points
  • "Mad Money" host Jim Cramer hears from Palo Alto Networks' incoming CEO Nikesh Arora and outgoing CEO Mark McLaughlin as he prepares to step down.
  • Arora says he hopes to use the lessons he learned while working at Google to take Palo Alto into the future.
Nikesh Arora on taking over Palo Alto Networks

Driving Palo Alto Networks into the future was one of outgoing Chairman and CEO Mark McLaughlin's primary concerns when he was choosing his successor, he told CNBC on Tuesday.

The cybersecurity company announced on Friday that former SoftBank and Google executive Nikesh Arora would take over as CEO effective Wednesday, June 6.

Palo Alto's stock declined on the news, recovering slightly after the company reported third-quarter earnings that topped expectations. Still, investors remained hesitant, with the stock shedding another 2 percent in Tuesday's trading session.

But despite initial backlash to what some perceived as Arora's lack of cybersecurity expertise, McLaughlin and Arora told "Mad Money" host Jim Cramer in a joint interview on Tuesday that Palo Alto was in good hands.

Emphasizing that the transition was planned for a while, McLaughlin said that Palo Alto, a leader in enterprise cybersecurity solutions, is focused on a slew of developing markets including the cloud, machine learning and new-age software.

"I think the company's going to look different in five years than it has today because of the real drive towards those platforms and those capabilities," McLaughlin told Cramer. "In looking for the perfect person to do that, we wanted somebody who is a very demonstrated business executive at scale and would bring those key attributes to the table to take us where the company's going to be in five years."

Arora, who was president and chief operating officer at SoftBank and chief business officer at Google, echoed McLaughlin's point and pushed back on critics who said he lacked experience.

"The good news is I knew nothing about advertising or ad sales when I joined Google in 2004 and I think that worked out," Arora, who was Google's highest paid executive in 2012, said on Tuesday.

"I needed something to drag me out of my house and [make me] go back to work," he admitted. "I look at the cloud revolution. It's very, very early on the enterprise space. I look at the fact that we're going to have to secure our digital future in there, and Palo Alto is already an early leader in that space."

Arora added that Palo Alto's "hyper-growth" trends and innovative security platforms drew him to the company. In a regulatory filing Monday, Palo Alto revealed that Arora's pay package could be worth roughly $128 million, which could make him one of the highest paid U.S. executives.

Arora also echoed McLaughlin, who is leaving the company for personal reasons and will stay on as vice chairman of the board, in saying that the company would continue to take clients from its competitors.

But, the new CEO said, "I'm hoping that the clients we take in the future are not just from Cisco and Fortinet and Check Point. I'm hoping that we're taking a whole bunch of clients in the cloud space because that's where this industry's going."

He also said he would leverage his contacts at Alphabet's Google to build relationships with top cloud and software providers.

"I'm hoping, as we go forward, we'll strike partnerships not just with Alphabet and Google but also with the other big players in the space, be it Microsoft or Amazon or many of our partners in the cybersecurity space," Arora said. "Mark and team have done a phenomenal job in building Palo Alto Networks to where it is today and I look forward to being able to take that forward and see if we can apply the principles of scale that we learned at Google to Palo Alto Networks."

Watch Mark McLaughlin and Nikesh Arora's full interview here:

Former SoftBank and Google exec Nikesh Arora talks taking over Palo Alto Networks with outgoing CEO

Disclosure: Cramer's charitable trust owns shares of Alphabet, Microsoft and Amazon.

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