Ixia jumps in IPO

Ixia (Nasdaq: XXIA) rose to 25.56, or 92 percent, after it priced shares at $13, just above its range of $10 to $12 a share for trading Wednesday. The maker of performance analysis systems for optical/electrical networks is expected to do well, despite adverse market conditions.

Ixia's systems help customers evaluate fiber-optic gear. Considering telecommunications carriers are spending billions on upgrading networks with relatively new equipment, Ixia's analysis tools are becoming a key cog in the purchasing process.

"Its the best of both worlds. If you just look at the numbers, it would be a good company -- in addition, it's in a hot sector," said Justin Burrows of Hoover Online's IPO Central.

Just that Ixia could price a deal amid the market volatility indicates the company has strong fundamentals.

For the six months ended June 30, the company had an net income of $2.29 million on revenue of $28.27 million, compared to income of $1.75 million on revenue of $8.21 million for the same period in 1999.

Not only is the company's profitability impressive, so is its self-sufficiency. After an initial $1.5 million in seed financing, Ixia has supported its growth almost all with cash generated from operations, according to Renaissance Captital, which picked it as IPO of the week. Growth has also been astronomical; in the first half of this year, the company's sales of $28 million have already outpaced the total for 1999.

Ixia faces competition primarily from test equipment manufacturers such as Agilent Technologies (NYSE: A), Netcom Systems and Adtech. It also competes with start-up companies such as Antara which are focused on network performance analysis and measurement. It also faces a threat from customers which may developed products in-house. Cisco Systems (Nasdaq: CSCO), its largest customer, has used internally developed test products for a number of years.

Sales to 5 largest customers represented 51 percent of net revenue in 1999. Sales to Cisco Systems accounted for 31 percent of net revenues in 1999.

Ixia's other distinguished customers include Juniper (Nasdaq: JNPR), Extreme Networks (Nasdaq: EXTR) and Nortel Networks (NYSE: NT). Chip makers Intel (Nasdaq: INTC) and Broadcom (Nasdaq: BRCM) also buy Ixia's performance analysis products.

The offering was managed by Merrill Lynch & Co., Donaldson, Lufkin & Jenrette, and Dain Rauscher Wessels.

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