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Net exchange IPO gets lukewarm response

Equinix launches its initial public offering, receiving just a tepid reception from the market despite considerable support from blue-chip technology companies.

Internet infrastructure company Equinix went public today, receiving just a lukewarm reception from the market despite considerable support from blue-chip technology companies.

The company earlier priced at $12, the high end of its expected range. After climbing to $14 in early trading, shares settled to close at $13.13.

Equinix is one of several companies that provide connection points for the various networks that make up the Internet. The company operates several huge warehouse-like facilities in which individual companies such as WorldCom, EarthLink Network, eBay, Yahoo or PSINet can link directly to each other, avoiding often-clogged points on the public Net.

Other facilities exist where networks connect with each other, but the volume of traffic on the Net has created traffic jams at some of these points. Moreover, some network operators have complained that many of these other "peering points" are actually owned and operated by rival telephone companies like WorldCom or Sprint.

Equinix was originally funded with a $12 million investment round from Microsoft, Cisco Systems, Benchmark Capital and Stanford University. Another round brought it $280 million, with backers including America Online, Netscape founder Marc Andreessen and E*Trade.

The company has already committed to $1.2 billion in spending over the next few years to build its Net hubs around the world.

Initially the company filed with the Securities and Exchange Commission to raise up to $184.2 million through the sale of 12.5 million shares in a projected range of $15 to $17 per share.

The tepid response to the company's IPO doesn't bode well for companies in related niches of the market, such as Global Crossing's GlobalCenter, which still has plans to release a tracking stock for its Web-hosting business.

Equinix sold 20 million shares in the offering. Goldman Sachs and Salomon Smith Barney were the lead underwriters.

The offering raised $240 million, much of which will be used to build as many as eight facilities around the world by next year, Equinix president Peter Van Camp said. The company has three centers open, with another three slated to open in the next 90 days.

Van Camp declined to comment specifically on the market's reception to the stock but said he was happy with the IPO.

"We're thrilled to have priced at the top of the range," Van Camp said. "We've taken a big step forward in the creation of this company."