IPO Update: Quest Software takes off

Quest Software (Nasdaq: QSFT) soared up 27 3/16, or 194 percent, to 41 3/16 Friday in its initial public offering.

The 4.4 million-share offering priced at $14 a share, the top of its $12 to $14 price range.

The company provides software for "thin-clients," such as Windows terminals, which performs very little data processing. Lead underwriter for the offering is Robertson Stephens, and co -managers are Donaldson Lufkin & Jenrette and CIBC World Markets Actuate Software (Nasdaq: ACTU) and Veritas Software (Nasdaq: VRTS) are similar companies.

Quest is actually profitable, a rarity among the cash-strapped debutantes looking to tap this August's markets. Net income for the three months ended March 31 was $883,000 compared to 1998's $868,000. Total revenue for the three months ended March 31 was $12.8 million, compared to $7 million in the same quarter of 1998.

Risks to investors cited in Quest's filings focus on the company's dependence on Oracle (Nasdaq: ORCL). The company's success is dependant upon its status as a complementary software provider for Oracle's database and application products. Its principal products, including SharePlex, SQLab Xpert, and SQL Navigator, are designed specifically to be used with Oracle databases. If Oracle moves on to standards incompatible with Quest's technology, or if Oracle loses market share for its database products, Quest's business, operating results and financial condition would be adversely affected.