IPO Update: AltiGen gains, XM Satellite radio struggles

AltiGen Communications Inc. (Nasdaq: ATGN) shot up 82 percent Tuesday in its IPO, after pricing 3.25 million shares at $10 each.

Shares were up 8 3/16 to 18 3/16 by Tuesday afternoon.

CIBC World Markets, Dain Rauscher Wessels and FAC/Equities were the underwriters. AltiGen has also granted the underwriters an option to purchase up to 487,500 additional shares of common stock.

AltiGen had $4.3 million in revenue for the nine months ended June 20, 1999, compared to $2.6 million for the same period in 1998. Net loss also grew this year; loss for 1999 was $5.2 million compared to $2.8 million for 1998.

AltiGen makes next generation, server-based telecommunications systems that allow businesses to use the Internet and the Public Switched Telephone Network, or PSTN, interchangeably.

Risks cited in the company's regulatory filings include the company's accumulated deficit of $15.1 million, as well as reliance on key distributors, Ingram Micro Inc. and Tech Data Corporation, which accounted for 45 percent of sales in the nine months ended June 30, 1999.

AltiGen is also caught up in litigation with NetPhone, Inc., which could prove "costly and time consuming." In June 1999, a letter from NetPhone alleged that AltiGen was infringing on a patent owned by NetPhone. NetPhone's motion and our cross-motion have not yet been decided.

AltiGen has a lot riding on the case. An adverse outcome could require AltiGen to us to obtain a license from NetPhone for lost revenue from what NetPhone calls its "Quantum device" - which accounted for 84 percent of AltiGen's revenue for the first nine months of 1999.

Other IPOs today.