Paradyne Networks closed up 39 1/4, or 231 percent, to 56 1/4 Friday in its initial public offering. Another IPO, Audible Inc., closed up 12, or 133 percent, to 21.
Paradyne Networks (Nasdaq: PDYN) had priced its initial public offering at $17 a share, a tad above the $14 to $16 a share price range it moved to Thursday.
The 6 million-share offering was underwritten by Donaldson, Lufkin & Jenrette. It was originally priced at between $12 to $14 a share.
Paradyne, which has 855 employees based in Largo, Florida, makes a broad range of Digital Subscriber Line products. Similar companies are PairGain Technologies Inc. (Nasdaq: PAIR), and Orckit Communications Ltd. (Nasdaq: ORCT). Efficient Networks launched a successful IPO on Thursday.
Paradyne's revenue is massive compared to other recent tech IPOs. For 1998, the company reported sales of $198.8 million, up from $181.3 million in 1997. Sales for the quarter ending March 31, were $54 million.
The company also reported a profit, yes a profit, in the first quarter of $2.3 million. But the profitable times may not last. Risks cited in the IPO filings include the chance that Paradyne may never achieve revenue growth or profitability. The company had an accumulated net deficit of approximately $37.2 million during the period from August 1, 1996 through December 31, 1998. They have not been profitable in any year of operations except 1997, as a result of the non-recurring gain because of the renegotiation of a contract with Lucent.
Paradyne's limited number of major customers could also prove risky. Direct product sales to Lucent accounted for approximately 35 percent of 1998 revenues. Sales to Tech Data Corp., a distributor, in 1998 accounted for approximately 15 percent of total revenue.
But 70 percent of sales to Tech Data represented products that were resold to Lucent, making it accountable for approximately 47 percent of Paradyne's total revenue in 1998 and 30 percent in the first quarter of 1999.
CS First Boston is the lead underwriter for the company, which offers spoken audio of books, newspapers, and magazines. The Wayne, New Jersey-based company of 41 employees was founded in 1995. Similar companies are Audiohighway (Nasdaq: AHWY) and RealNetworks (Nasdaq: RNWK).
For 1998, the company reported revenue of $376,000 and a loss of $8.1 million. For the first quarter ending March 31, Audible had sales of $315,000 and a loss of $1.47 million. As of March 31, Audible had losses of $21.2 million since inception.