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Centillium gets off to decent start

Centillium Communications (Nasdaq: CTLM) shot up 3 7/8, or 20 percent, to 22 7/8 Wednesday in its initial public offering.

It priced its shares at $19, the middle of its revised range of $18 to $20 a share.

The range was lowered from an initial estimate of $22 to $24 a share. CS First Boston is the deal's lead underwriter Robertson Stephens and Salomon Smith Barney acted as co-managers.

"It has only about $4 million in sales, but it works with the big boys, such as NEC, Copper Mountain (Nasdaq: CMTN) and Sumitomo," said Kenan Pollack of IPO Central, who added that while "broadband is still more hype than reality," he sees long-term strength in the DSL category.

For the year ended December 31, the company lost $19.7 million on revenue of $3.7 million, as compared to a loss of $9.3 million on revenue of $752,000 in 1998.

"Hardware is the common denominator," Pollack said of the companies that have weathered the valuation turbulence best.

The fabless semiconductor company develops integrated circuits (ICs) for digital subscriber line (DSL) infrastructure. The company relies on Mitsubishi Electric, United Microelectronics Corporation and Taiwan Semiconductor Corporation to manufacture its chips.

The company's sales were concentrated in a limited number of customers. For 1999, sales to Sumitomo Electric Industries accounted for 34.4 percent of revenue and sales to NEC accounted for 21.1 percent.

Centillium lists its principal competitors as Alcatel (NYSE: ALA), Analog Devices (NYSE: ADI), Conexant Systems (Nasdaq: CNXT), GlobeSpan (Nasdaq: GSPN), Lucent (NYSE: LU), STMicroelectronics (NYSE: STM), and Texas Instruments (NYSE: TXN).