Accelerated burns rubber on Street debut

Shares of Accelerated Networks more than triple in its first day of trading, an indication that some IPOs are able to rise above a depressed market.

2 min read
Shares of Accelerated Networks more than tripled in the company's first day of trading, an indication that some initial public offerings are able to rise above a depressed market.

Moorpark, Calif.-based Accelerated Networks, which transmits data over a single broadband network, sold 4 million shares this morning at $15. The shares reached $47.88 at the close of regular trading, about a 220 percent gain that gives the company a market capitalization near $2.4 billion.

"It's a moon shot. I haven't had a chance to say that in a long while," said Jeff Hirschkorn, senior market analyst with IPO.com. "This is a sign of better times to come. It's also a sign that the IPO market does have a pulse."

The pricing of Accelerated Networks' shares indicates how the IPO market has gone from hot to cold to at least lukewarm in the past few months.

Underwriter Credit Suisse First Boston initially lowered the pricing range by $5, to $11 to $13, which typically indicates weak demand. But yesterday, the banker was able to raise the price by $2 to $15.

The IPO marks the second victory for Credit Suisse, which handled Handspring's successful IPO on Wednesday. Shares of the maker of handheld devices that use the Palm operating system jumped 35 percent in first-day trading.

"They're 2 and 0 for the week, a good week for them," said Richard Peterson, an analyst with Thomson Financial Securities Data. "Rarely do you see companies cut and then raise the range from the cut."

David Menlow, president of IPO Financial Network, said Credit Suisse should be given credit "for responding appropriately to market conditions that were certainly less than enthusiastic on June 1. Subsequent to that, the market has strengthened rather dramatically."

Still down 20 percent from its March 10 peak, the Nasdaq composite index passed 4,000 for the first time in two months earlier this week.

Despite improvements, the IPO market has yet to approach the strong performances seen in the first quarter of 2000, when 90 companies increased their pricing ranges, compared with 17 so far this quarter, Peterson said.

Accelerated Networks sells bundled voice and data services over a single broadband network. The company lost $18.7 million, or $2.44 per share, in the first quarter of 2000 on revenues of $7.1 million.

While shunning other sectors such as e-commerce, many investors are favoring telecommunications companies.

"This is not a new theme and shouldn't be that exciting to investors, but apparently (investors) are looking at this with a lot of promise," Menlow said.