Verio goes public, jumps 30%
The ISP's stock jumps as much as 30 percent in trading and the company raises $126.5 million in its initial stock offering.
The national provider of Internet connectivity and services to small- and medium-sized businesses saw its stock gain 18 percent on day one, to end at 27.06, up 4.06 from the underwriters' price of $23 per share. The stock traded as high as 30.
The company increased the number of shares and price per share yesterday and raised the number of shares to be offered from 5 million to 5.5 million, according to a filing with the Securities and Exchange Commission.
The stock jumped to 28 on the first trade of the day, up 5 points.
The company had raised the expected offering price to a range of between $22 and $23 per share, up from between $18 and $20 per share.
Verio now trades on the Nasdaq National Market under the symbol "VRIO."
Nippon Telegraph and Telephone (NTT) has agreed to purchase shares of common stock directly from the company at the opening bell of the offering--up to 12.5 percent of the total number of outstanding shares of stock.
Since its founding in March 1996, Verio rapidly has established a national presence through the acquisition, integration, and growth of local ISPs with a business customer focus.
The Englewood, Colorado-based company will continue to face stiff competition from larger competitors, like the Baby Bells and other telecommunications companies that are trying to leverage their networks in order to offer a variety of phone and data services to customers.
For example, SBC Communications purchased Ameritech in a $62-billion buyout. It was a move to create a "one-stop shop" for communication services in the telecommunications industry, a result of deregulation and converging technologies.
Other recent big deals include, MCI's proposed merger with WorldCom, AT&T's buyout of Teleport, Bell Atlantic's merger with Nynex, and SBC's other major acquisition--Pacific Bell.
Verio, however, believes it has carved a niche for itself by focusing on small- and medium-sized businesses.
The needs of those companies are underserved by both the national and local Internet service providers (ISPs), the company said in its filing, noting that national ISPs lack the local presence to provide customized, hands-on service, and that local ISPs typically lack the scale and resources required to provide dedicated, high-capacity Net access, around-the-clock support, and customized product offerings.
Verio expects to report revenue of about $21.2 million, and a net loss of about $28.4 million, for the quarter ended March 31, 1998, compared with revenue of $13.4 million, and a net loss of $20.8 million, for the quarter ended December 31, 1997, according to the SEC filing.
After today's offering, there will be about 32.16 million Verio shares outstanding, giving the company a market capitalization of about $750.7 million, based on an offering price of $23 per share.
The underwriters for the offering include Salomon Smith Barney, Credit Suisse First Boston, and Donaldson, Lufkin & Jenrette.