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Vixel soars, other IPOs post modest gains

Vixel (Nasdaq: VIXL), which makes fibre channel products for storage area networks (SANs), soared 159 percent, or 27 3/16 to 45 3/16, in its initial public offering Friday.

Vixel shares had priced at $18, ahead of its revised price range of $14 to $16. Vixel offered 3.7 million shares with BancBoston Robertson Stephens as the lead underwriter. Vixel also upped its price range to $14 to $16 from $10 to $12 Thursday.

The company is hoping to mirror the success of competitor Brocade Communications (Nasdaq: BRCD), up more than 1,000 percent from its May offering price of $19.

In regulatory filings, Vixel boasts it is a leading provider of SANs based on revenue and number of ports shipped. The company competes with Brocade, Gadzoox Networks (Nasdaq: ZOOX) and Emulex Corp. (Nasdaq: EMLX).

According to International Data Corporation report, worldwide sales for SAN products should grow from $2.5 billion in 1998 to over $13.3 billion in 2002.

For the fiscal year ending Jan. 3, the company reported sales of $39.4 million and a loss of $21 million. For the six months ending July 4, Vixel had sales of $22 million and a loss of $9.8 million.

But there are a few problems. Vixel disclosed that one of its components has a high failure rate, which doesn't bode well for customer satisfaction. Vixel said Sun Microsystems cut back on purchases of the component, but company smoothed things over by issuing Sun 150,000 shares. For the fiscal year, Sun represented 54.4 percent of Vixel's sales and for the six months ending July 4 Sun accounted for 34 percent of sales.

Other IPOs had modest gains Friday.

  • Daleen Technologies (Nasdaq: DALN), which makes billing software, was up 2 to 14 in afternoon trading. The company offered 4.1 million shares. The offering priced at $12, the top of its range. Revenue for Daleen is a bit light, but growing quickly.

    For 1998, the company had sales of $5.2 million and a loss of $12.1 million. For the six months ending June 30, the company had sales of $7.1 million and a loss of $4.5 million.

    The company sees losses" for at least the next several quarters." The company also has a limited history as a software company. Before 1996, Daleen was primarily a consulting firm.

    Five customers accounted for 99 percent of Daleen's revenue in 1998 and 64 percent for the first six months of 1999.

  • Williams Communications (NYSE: WCG) was up 5 1/8 to 28 1/8. The company priced a whopping 29.6 million shares Thursday at $23, the top of its projected price range. Williams is a fiber optic communications company similar to Qwest Communications (Nasdaq: QWST) and Level 3 (Nasdaq: LVLT).

    Williams is seen by analysts to be a strong long-term stock.

  • Digital Insight (Nasdaq: DGIN) priced 3.5 million shares at $15 each for trading Friday.

    Shares priced above their original estimated range of $12-$14. Morgan Stanley is the lead underwriter, Deutsche Banc Alex Brown and Banc of America are co-managers.

    The Calabasas, Calif., provides Internet banking services to community financial institutions with assets of less than $10 billion. Using Digital Insight's product, individuals can use the Internet to transfer funds, pay bills, and complete online loan applications, among other things. While over 50 percent of the largest 100 banks in the United States offer Internet banking, only 5 percent of community financial institutions do, according to Online Banking Report and International Data Corporation, respectively.

    For the six months ended June 30, 1999, Digital Insight had a loss $3.6 million on revenue of $7.1 million. The company had also calculated an accumulated deficit of $11.5 million.