CacheFlow jumps fivefold following IPO

Internet firm CacheFlow jumps out of the IPO starting gate as shares race ahead more than fivefold on the company's first trading day.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
Internet firm CacheFlow today jumped out of the IPO starting gate, with shares racing ahead fivefold on the company's first trading day.

Shares in the company, which markets appliances designed to accelerate the delivery of information on the Internet, opened at $110--far above its IPO price of $24. The stock ended the day up $102.75 to $126.75--an increase of more than 428 percent--on 7.3 million shares. At today's closing price, the company claims a market capitalization of more than $4 billion.

CacheFlow had increased its pricing range to $18 to $20 a share from $11 to $13, as investor interest in firms that help eliminate data congestion on the Net has lately been overwhelming.

Tune in to CNET News.com TV's IPO Forecast CacheFlow specializes in Net caching appliances, which reduce the time it takes to retrieve data from the Internet by storing frequently used information closer to the end user. Companies use the devices to ensure their Web sites are accessible even at peak times, such as during online ticket sales.

The company's offering is only the latest in a string of successful IPOs from Net-based firms. Akamai Technologies, a caching company whose software speeds Web page delivery, is trading 631 percent above its IPO price, giving the company a market value of $17.2 billion.

A handful of similar companies are trying to push technology that stores frequently used data in servers strategically located near users. Analysts say the technology, which is employed by major Web sites and Internet service providers, is essential to speeding downloads and alleviating the increasing congestion on the Net.

In addition to Akamai's IPO, which put a spotlight on the market, competitor Sandpiper Networks was acquired in a $630 million deal last month.

Several other companies, some of which use satellite technology, also are attempting to end Web waits by working to better send data along networks. Mirror Image and Adero offer similar caching services while the satellite-based group includes SkyCache, iBeam Broadcasting, and Edgix.

CacheFlow raised $120 million in its offering. Morgan Stanley was the lead underwriter. The company's customers include Delta Airlines and Xerox, which helped generate $3.6 million in revenue for the three-month period ending July 31, compared with $809,000 for the same period a year ago.

CacheFlow posted a loss of $6.6 million in the period, compared with a loss of $2.3 million a year earlier.

CacheFlow trades under the symbol "CFLO" on the Nasdaq Stock Market.

News.com's Corey Grice and Bloomberg contributed to this report.