At the opening, shares peaked at 270.88, then traded between 200 and 250 before closing at 184.75, giving the company a market capitalization of $14.4 billion. Trading volume was heavy at 9.9 million shares.
Sycamore closed with the biggest market value ever achieved by an Internet-related company in its first day of trading, according to CommScan. It is also achieved the fourth-largest gain--386 percent--for a U.S. stock on its first day of trading.
Sycamore Networks Wednesday priced its initial public offering (IPO) at $38 a share. That day, Sycamore raised its pricing range to $35 to $37 a share, up from an earlier range of $18 to $20.
The company, which makes high-end networking equipment for fiber-optic networks, raised just over $284 million based on the sale of 7.475 million shares. Sycamore trades under the ticker "SCMR."
"The networked economy, I think it's going to be real and what's fundamental to that economy is bandwidth," said Desh Deshpande, Sycamore's founder and chairman, in an interview with CNET News.com.
Sycamore generated $11.3 million in revenue and posted a loss of $19.5 million for the year ended July 31, compared with no revenue and a loss of $693,000 the previous year. All of the company's revenue so far has come as a result of a contract with telecommunications carrier Williams Communications, according to the company's Securities and Exchange Commission filing.
Sycamore has also reserved "approximately 200,000 shares of common stock for sale to Williams Communications," according to the company's registration statement. The stake is worth nearly $37 million after the company's first day of trading.
Asked about using a single customer as a revenue source, Deshpande said it is simply the nature of an emerging niche. "It's an indication that it's an early market," he said.
IPO watchers had expected the offering to generate strong interest because its co-founder, Gururaj Deshpande, also founded Cascade Communications, which was purchased by the former Ascend Communications in 1997 for $3.7 billion. The company's executive roster is loaded with talent from Cascade.
But Sycamore is also fortunate to operate in a portion of the market that seems oblivious to the changing tide of Wall Street. Recent offerings from the likes of Foundry Networks, Juniper Networks, Extreme Networks, and Redback Networks have exploded at the starting gate. Foundry closed its first day of trading following its IPO up 525 percent.
Sycamore managed to increase the price of its shares at a time when technology stocks have been volatile, forcing some companies to postpone their IPOs. A few companies, however, went public this week with successful results. Martha Stewart Living Omnimedia, for example, nearly doubled on its first day of trading.
Sycamore makes hardware and software for communications companies that are building long distance networks based on fiber-optics. Sycamore provides technology that allows telecommunications carriers to better manage network bandwidth and allows technicians to add communications services easier than current technology, according to the firm's prospectus.
The company lists Ciena, Lucent Technologies, and Nortel Networks as competitors, according to the filing.
Sycamore was founded in February 1998 and shipped its first product in May of this year. It currently has about 200 employees.
Morgan Stanley Dean Witter is the lead underwriter.
Bloomberg contributed to this report.