Oplink Communications (Nasdaq: OPLK) shot up 86 percent Wednesday after priciing its IPO at $18, the top of its upwardly revised $16 to $18 range. The deal's range was revised twice from an original $10 to $12 a share.
Shares in the maker of market fiber optic components and integrated optical modules that increase the performance of optical networks were up 15 to 33.
"Optical networking has had tremendous support," said Kenan Pollack of IPO Central, who expected the deal to do well based on its placement in this not category, and the large size of the 13.7 million share deal.
Like most companies going public, Oplink is racking up losses. For the fiscal year ended June 30, the company had a net loss of $24.9 million on revenue of $39.05 million, as compared to a loss of $3.47 million on revenue of $9.09 million in 1999. As of June 30, its accumulated deficit of $32.5 million.
Aside from ongoing losses, another risk to investors is the concentration of revenue in the company's top three customers together accounted for 68.9% of our revenues in the year ended June 30, 2000. Lucent Technologies (NYSE: LU), Sycamore Networks (Nasdaq: SCMR) and JDS Uniphase (Nasdaq: JDSU), which accounted for 42.6 percent, 15.7 percent and 10.6 percent of revenues for the year ended June 30, 2000.
Investors should also watch the company's relationship with Lucent, which has told Oplink that it "may decrease and eventually discontinue incorporating one of our optical components into some of its products over the next two years," Oplink said in its regulatory filings. Oplink cites Avanex, Ciena (Nasdaq: CIEN), Lucent, New Focus, Nortel and JDS Uniphase, which acquired E-Tek and plans to acquire SDL, as competition. The catch is the giants -- even Oplink customers -- are gobbling up the smaller players and posing a threat to the company.
• The Day Ahead: Oplink set to soar, but watch Lucent relationship
• IPO Insider >