Stock in Avaya, a corporate networking company, fell in first-day trading today after being spun off from communications equipment giant Lucent Technologies.
Avaya shares opened at $22.88 and traded as high as $22.94. At 1 p.m. PT, the close of regular trading, shares slipped about 12 percent to $20.19 on the New York Stock Exchange. The stock traded as low as $19.25 today. More than 2.4 million shares changed hands.
Unlike most initial public stock offerings (IPOs), which open for trading at a specific predetermined price, Avaya had traded on a "when-issued" basis since Sept. 18, when it opened at $20.50 and closed unchanged, according to the company. Stocks that trade on a when-issued basis are conditional, because the stock has been authorized but not yet formally issued. Avaya's stock price climbed over the last week before opening at $22.88 today, the company's first day of regular public stock market trading.
The $7.4 billion company, formerly the Enterprise Networks Group at Lucent, was spun out of Lucent so that the massive telecommunications gear maker could focus on more lucrative markets, such as high-end networking and wireless products for communications carriers and Internet service providers.
Avaya sells phone systems and software to business customers, which is a slower-growing business. In an effort to grow more rapidly, the company will offer Internet customer service software and virtual private networking devices. The Avaya unit was known as an early leader in the unified messaging market.
The spinoff is part of a broader restructuring plan for Lucent, which saw its stock gain more than 1 percent to finish the day at $31.
Lucent shareholders received one Avaya share for every 12 Lucent shares they own. Avaya trades under the "AV" symbol on the New York Stock Exchange.
The company also introduced today Avaya Hosted Solutions, a service that allows Internet companies and upstart communications carriers to offer Internet-based phone and voice services to small and midsized business customers.