Crossroads quadruples in IPO
Crossroads Systems (Nasdaq: CRDS) rose 60 23/32 to 78 23/32 -- a gain of more than 337 percent -- in its first day of public trading Wednesday.
The IPO had priced 3.75 million shares at $18 each and upped its offering from 3.5 million shares in a range of $11 to $13.
SG Cowen is the lead underwriter, Dain Rauscher and Morgan Keegan are acting as co-managers.
Crossroads, which makes storage routers to connect older servers and storage systems to new storage area networks, follows the hot market debut of other storage area networking companies such as Brocade Communications (Nasdaq: BRCD), up 7 11/16 to 245 5/8 from its offering price of Gadzoox Networks (Nasdaq: ZOOX) up 2 1/4 to 54, and Vixel (Nasdaq: VIXL) up 1 11/16 to 34 1/4.
Crossroads had net loss of $3.6 million on revenue of $11.8 million for the 9 months ended July 31, compared to a loss of $3.8 on revenue of $2.0 million for the same period in 1998.
In the nine months ended July 31, 1999, revenue from Compaq and StorageTek represented 44 percent and 30 percent of the company's total revenue. Other risks associated with Crossroads business includes its exclusive dependence on the storage area network market; fibre channel-based storage area networks, or SANs, were first deployed in 1997, and the market for SANs is still in an uncertain infancy.
The offering looks good judging by its sales momentum and run rate, according to Francis Gaskin of the IPO Desktop. "Their run rate is on a hockey-stick curve, a kind I don't usually see in a prospectus."
Crossroads has also licensed their technology to Hewlett-Packard, Gaskins said, cautioning that H-P could be hefty competition but "the market's not paying any attention to this."
Although Crossroads made milestone gains, tripling in its debut, Bsquare made conservative gains, and ZapMe! was looking for shock therapy.
Bsquare (Nasdaq: BSQR) had a solid debut, rising 10 5/8 to 25 5/8, or 70 percent above its offering price of $15. The IPO priced above its initial range of $12-$14.
What does a square tech company do? Follow the leader. Bsquare integrates and customizes Microsoft Windows CE for OEMs and semiconductor vendors. It also wasn't rebellious enough to have net losses; the software company had net income of $866,000 on revenue of $18.5 million for the six months ended June 30.
The company integrates the Microsoft Windows CE operating system into a variety of devices it calls intelligent computing devices, or ICDs. Original equipment manufacturers, or OEMs, semiconductor vendors and Windows CE software developers rely on its products and services to help bring customized ICDs such as television set-top boxes; handheld and palm-size PCs and gaming systems to market.
The lead underwriter for the offering of 4 million shares is Credit Suisse First Boston.
The company, which plans to provide satellite-delivered high-speed Internet access and PCs schools managed to scrape together $147,000 in revenue over the six months ended June 30. The company has just begun generating revenue from sponsorships and has yet to make money from e-commerce or network services. ZapMe! has accrued net losses of about $14.7 million since its inception.
Merrill Lynch is the lead underwriter for the offering of 9 million shares, Deutsche Banc Alex Brown and Thomas Weisel are co-managers.