Sequoia Software Corp.(Nasdaq: SQSW) rose 2 1/16 to 10 1/6 after braving harsh market conditions to offer 4.2 million shares at $8 each Friday.
While most of the past month's IPOs have dropped off the calendar, and the few that have gone public haven't fared well, Sequoia is betting its XML business will make it a hot IPO.
Shares priced at the low end of their $8 to $10 range, which was lowered from $11 to $13 last month.
But if investors take to the offering like they did to that of similar XML software company WebMethods (Nasdaq: WEBM), Sequoia has nothing to worry about. WebMethods currently trades around 82, well above its February offering price of $35.
Both companies make Internet software based on XML, or as Extensible Markup Language. XML is a more limber version of HTML. Sequoia's products allow its customers to create e-business portals where employees, customers, suppliers and partners can interact.
Like most IPOs, Sequoia records losses. For 1999, Sequoia reported sales of $8.4 million and a loss of $12.8 million. The company also has an accumulated deficit of $26.6 million.
Other risks to investors include Sequoia's reliance on a limited number of customers; Blue Cross/ Blue Shield of Minnesota accounted for 23.8 percent of revenue and the State of Texas accounted for 12.2 percent.
The company's close ties to Microsoft could also be harmful to its business. Sequoia built its XPS product to operate on the Windows NT/Windows 2000 platform, excluding it from the popular Linux and Unix markets.
The company's top competitors include Oracle (Nasdaq: ORCL), Open Market (Nasdaq: OMKT) and Broadvision (Nasdaq: BVSN) according to Hoover's Online.
Lehman Brothers is the deal's lead underwriter. The other managing underwriters are SG Cowen, Wit SoundView, and Fidelity Capital Markets.
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