IPO Update: Vitria storms up 202 percent in debut

Jan. 2, 2002 4:43 p.m. PT

2 min read

Vitria Technologies (Nasdaq: VITR) closed up 32 1/4, or 202 percent, to 48 1/4 Friday after pricing its 3 million-share offering at $16 a share. The stock peaked at 53 in early trading.

Shares were originally priced at $10 to $12 a share and later bumped to $13 to $15 a share.

The lead underwriter is CS First Boston with Merrill Lynch and Robertson Stephens as co-managers for the offering. Vitria makes automation software for e-businesses.

Vitria may have a hard time standing out from other e-business offerings, said Ed Acly, director of middleware research at International Data Corp. Acly, who sees at least 2 companies a day, said he "hasn't met anyone in the last two months who hasn't said they're e-business." Acly expects the company will fare comparably to similar businesses Tibco Software (Nasdaq:TIBX) and Active Software (Nasdaq: ASWX), which had relatively successful debuts

BusinessWare, Vitria's key product, is infrastructure software that allows companies to conduct business via the Internet automatically, without human intervention or the manual entry of information. BusinessWare licensees include Federal Express Corp. (NYSE: FDX), Duke Energy Corp. (NYSE: DUK) and PageMart Wireless Inc. (Nasdaq: PMWI).

Vitria had a net loss of $6.0 million on revenue of $7.1 million in for the six months ended July 30, 1999, compared to a loss of $4.3 million on revenue of 1.0 million for the same period in 1998 .

Aside from the accumulated deficit of $16.2 million Vitria had on tab as of June 30, risks investors should be wary of include the company's limited number of customers, and stiff competition. In the six month period ended June 30, sales to Sprint and Qwest accounted for 16 and 10 percent of total revenues, according to company filings.

The company's competitors include vendors of Enterprise Application Integration, or EAI, software, such as Active Software, Inc., CrossWorlds Software, Inc., and New Era of Networks, Inc. Other companies are offering products that address different aspects of Vitria's software, including BEA Systems, Inc., Forte Software, Inc., Hewlett-Packard Company, IBM Corporation and Tibco Software Inc. Microsoft Corp (Nasdaq: MSFT) has also announced its intention to introduce products which could compete with Vitria's product.

Proceeds of the offering, expected to be around $29.8 million, will be partially used for the $45 million the company anticipates spending on research and development, marketing, and other expenses over the next 12 months.