Riverstone rises in IPO despite sector troubles
Despite a bloodbath among networking stocks, Cabletron Systems spinoff Riverstone Networks sees its shares inch up 9 percent in the company's first day of trading.
Riverstone's shares rose $1.06 to close at $13.06, as 14 million shares exchanged hands Friday.
Riverstone late Thursday priced its shares at $12 each, the middle of its previously projected range. The company, which trades under the ticker symbol "RSTN," sold 10 million shares to raise $120 million in its initial public offering.
Morningstar analyst George Nichols said Riverstone's IPO came out at the worst possible time. Telecommunications equipment maker Nortel Networks announced a profit warning Thursday afternoon, dragging down its stock as well as those of Cisco Systems, Juniper Networks, and other networking companies Friday.
Riverstone's small increase on its first day of trading is a good sign, Nichols said.
"On a day there's a bloodbath on the Nasdaq, that's not too shabby. It's not the fireworks some people were hoping for, but a small percentage gain for Riverstone is a positive for the company," Nichols said.
Riverstone, which makes networking hardware that telecommunications service providers use to speed content over the Internet, competes against Cisco, Nortel, Extreme Networks, Foundry Networks and others in the lucrative service provider market.
Riverstone chief executive Romulus Pereira said he was pleased with the first day of trading, adding that he was unconcerned with the rocky financial market conditions.
"We are encouraged that we were able to hold our own on a day the market was significantly down," Pereira said. "It made sense for us to go public. It's enabled us to establish brand presence and an identity. We're taking the long-term view, regardless of what he short-term ups and downs are (in the stock market)."
Riverstone is the first of four Cabletron spin-offs that the company plans to take public. Enterasys Networks targets corporate networks, Aprisma Management Technologies sells Cabletron's network management software, and Global Network Technology Services provides consulting services to customers.