Finisar shoots up 357 percent in IPO

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Finisar Corp. (Nasdaq: FNSR) closed up 67 7/8, or 357 percent, to 86 7/8 Friday in its initial public offering. The network-equipment maker priced its offering at $19 a share.

The company raised the number of shares on its offering to 8.15 million from 7.7 million, and the projected price range to $16-$18 per share from $12-$14 a share.

Finisar is at the junction of the two hottest sectors within networking equipment: fibre channel based storage networks and gigabit ethernet based local area networks. Finisar sells components and systems to both of these sectors to clients such as as Newbridge Networks (NYSE: NN), 3Com (Nasdaq: COMS) International Business Machines Corp. (NYSE: IBM) and Sun Microsystems Inc. (Nasdaq: SUNW).

"They don't have the same sales up ramp that JNI Technologies (Nasdaq: JNIC) had, but they're in the same space," said Francis Gaskins of the IPO Desktop, who expects Finisar will fare comparably to JNI, which has continued to see blue sky since it rocketed in its recent IPO. He said that Finistar has a 55 percent gross profit margin, and customers include Brocade Communications (Nasdaq: BRCD) and Extreme Networks (Nasdaq: EXTR)

For the three months ended July 31, 1999, the company had revenue of $13.9 million, as compared to $6.8 million for the year ago period. Net income rose slightly to $1.2 million from $ 1.1 million for the 1998 period .

Finisar pans to use the approximately $127.7 million in net proceeds it should net from the IPO to repay debt, redeem preferred stock and for general corporate purposes, mainly working capital and capital expenditures.

Risks cited the company's filings with the SEC include price erosion from Finisar's competitors. In optical subsystems, Finisar competes with primarily with Agilent Technologies, Inc., Cielo Communications, Inc., IBM and Vixel Corporation. For network performance test systems, Finistar faces competition from Ancot Corp, I-Tech Corp and Xyratex International.