Quantum Effect Devices Inc. (Nasdaq: QEDI), manufacturer of high-performance embedded microprocessors, closed up 40 1/2, or 253 percent, to 56 1/2 Tuesday after pricing its 3.7 million-share IPO at $16 each.
After the offering there will be about 25.9 million shares outstanding in the company. The underwriters, Morgan Stanley Dean Witter, Lehman Brothers and Robertson Stephens, can get an extra 558,000 shares in the event of heavy demand. QED said it will sell 3 million shares while a stockholder is selling the additional 720,000 shares, from which it won't receive any proceeds.
For the six months ended December 31, QED had a loss of $2.3 million on revenue of $21.2 million, compared to a loss of $6.9 million on revenue of $2 million for the comparable period in 1998.
The company has some significant customers, including Cisco Systems (Nasdaq: CSCO), Hewlett-Packard Co. (NYSE: HWP) and Lexmark International Group (NYSE: LXK). QED relies on one main product, and next-generation versions of it -- its RM7000 embedded microprocessor, which it began shipping in the second half of 1998.
QED faces stiff competition in the market for embedded microprocessors from companies using MIPS technology such as NEC Corp., Toshiba Corp and Integrated Device Technology, (Nasdaq: IDTI). It also competes with companies using RISC, technologies, such as PowerPC, developed by Motorola, Inc (NYSE: MOT) and IBM Corp (NYSE: IBM).