Updated: Next Level makes its own IPO success

At one point Wednesday, Next Level Communications Inc. (Nasdaq: NXTV) shares traded for more than triple their initial offering price.

Shares in the broadband communications systems provider settled down slightly to 50 3/4, up 30 3/4, or a 153.8 percent gain - still remarkable gains considering the big drain on the market from the simultaneous debuts of United Parcel Service Inc. (NYSE: UPS) and Expedia (Nasdaq: EXPE).

Next Level's deal priced at $20, above its expected price range of $17 to 19 each. About 79.4 million shares were left outstanding, excluding shares reserved for employee stock options issuance.

Next Level, which enables telephone companies to compete with cable companies in the growing data and video markets, is mostly owned by cable converter box maker General Instrument Corp. (NYSE: GIC), the company's largest shareholder. After the completion of General Instrument's pending merger with Motorola Inc.(NYSE: MOT), Motorola will control the company.

"If Next Level can effectively help telcos compete with cable companies, they could be in a big market," said Francis Gaskins of the IPO Desktop. But he advised this offering was hard for retail investors to figure out, since the SEC filings were complicated.

"It's a good thing General Instruments has deep pockets," Gaskins said, since Next Level only had gross margins of 7 percent in the September quarter, and in general, the numbers did not look strong.

Next Level's filings show its pro forma 1999 revenue for 9 months ended Sept. 30 was $32.4 million with a net loss of $54.9 million. Its two biggest customers are U S West Inc. (NYSE: USW) and Bell Atlantic Corp. (NYSE: BEL).

"It's one of those companies focusing on broadband and more specifically, DSL, so it's going to get a lot of attention. The whole sector of broadband infrastructure is really a hot area and there are no signs of it slowing,'' said Steven Tuen, an analyst at IPO Value Monitor.

Competitors include Alcatel , Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Corp.(NYSE: NT), as well as telecommunications carriers.

Reuters contributed to this report.