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IPO changes are mixed bag for Loudcloud

The Internet-infrastructure company started by Netscape co-founder Marc Andreessen increases the number of shares it will offer in early March but reduces the price.

    Loudcloud, the Internet-infrastructure company started by Netscape co-founder Marc Andreessen, on Friday increased the number of shares it will offer in an initial public offering scheduled for early March.

    The Sunnyvale, Calif.-based company now plans to sell 20 million common shares instead of 10 million, according to a filing with the Securities and Exchange Commission. The company also reduced its expected price range to $8 to $10, from a previous range of $10 to $12.

    With the changes, the company will now aim to raise approximately $180 million, up from an earlier goal of $110 million, based on the number of shares being sold and the mid-range price of $9.

    The changes are a mixed bag for Loudcloud: Typically companies increase the number of shares offered because of strong investor demand but reduce their price range in response to falling demand.

    David Menlow, president of the IPO Financial Network, described the price reduction as a good move by the underwriters, showing that "they want to put the deal more in line with market conditions."

    "Offsetting that is the suspicious increase by 100 percent in the amount of shares. I don't know where we go with that," he said.

    Loudcloud's IPO is expected to price on March 7 and begin public trading the following day, according to a spokesperson at Goldman Sachs, one of Loudcloud's underwriters. However, IPO dates are flexible and often change depending on market conditions.

    Few private companies have been willing to brave the IPO market this year, which has been struggling to rebound from a steep decline that started last year. Since the beginning of the year, only 16 companies have launched IPOs, compared with 63 during the same time period last year, according to the market-research company CommScan.

    Loudcloud however, has been an extremely anticipated IPO given Marc Andreessen's involvement, as well as the backing of two top investment banks.

    "The power of Marc Andreessen is a very compelling factor," said Menlow. "You don't just walk away from a Netscape and become a no-name. He is a magnet for investor money."

    Loudcloud has applied to trade on the Nasdaq under the ticker symbol "LDCL."