Networking firms make waves on Wall Street

A handful of communications newcomers became the latest to make waves on Wall Street today, where Turnstone Systems and Impsat Fiber Networks issued well-received initial public offerings (IPO) and iBeam Broadcasting filed for its own $170 million public stock offering.

Quantum Effects Devices, a networking chipmaker, also rushed out of the starting blocks today. And analysts are looking for a strong showing from Avanex, a component maker for optical networking companies, later this week.

The recent deals follow a smashing year for the communications industry, which saw stock in optical networking companies, high-speed digital subscriber line (DSL) equipment makers and service providers, and Internet content caching and distribution companies skyrocket.

All of these niches of the communications industry have been swept up in the Internet boom and the resulting thirst for cutting-edge networking technology to speed delivery of Internet data.

"Networking equipment was arguably the strongest sector of the IPO market last year," said Ken Fleming, an IPO analyst at the Renaissance Capital IPO Fund. "There are some investors who are sick of waiting for profits from (business-to-business) and e-commerce companies because the profits are so far off.

"A lot of the networking companies are profitable or will be soon," Fleming said.

Stock in Turnstone Systems, a profitable maker of high-speed digital subscriber line (DSL) equipment, jumped $68, or 234 percent, to close at $97 today. The company claims Covad Communications and Rhythms NetConnections among its customers.

Quantum Effect Devices, a component maker for optical networking equipment manufacturers, spiked more than 250 percent.

Combining the lure of fiber-optic networks and the burgeoning Latin American market, stock in Impsat Fiber Networks, an upstart communications carrier serving Argentina and neighboring countries, increased more than 70 percent to close at $29.

Separately, iBeam Broadcasting, a satellite-based content distribution company focused on streaming Webcasts and caching, filed documents with federal regulators for its own IPO.

iBeam, which plans to trade on the Nasdaq stock market under the "IBEM" ticker symbol, hopes to raise $170 million. Morgan Stanley Dean Witter will serve as the lead underwriter while Bear, Stearns, Donaldson, Lufkin & Jenrette, and Robertson Stephens will co-manage the IPO.

Within the past year dozens of communications-related companies have gone public with stellar results. Most notably networking equipment companies such as Juniper Networks and Sycamore Networks, content distribution firm Akamai Technologies, and DSL companies such as Northpoint Communications and Rhythms had strong IPOs.

"The communications sector has been strong, especially anybody that focuses on making the Internet faster," Renaissance Capital's Fleming said. "The optical networking companies have done very well. The DSL companies have done very well."