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IPO Roundup: Stratos, ClickSoftware gain ground

Stratos Lightwave (Nasdaq: STLW) shot up 13 1/4 to 34 1/4 Tuesday in its initial public offering.

It priced 8.75 million shares at $21, far above its $16-18 range for debut Thursday.

The company makes optical subsystems for high data rate networking, data storage and telecommunications applications. Methode will hold about 86 percent of Stratos stock after the offering but plans to divest those shares in a distribution to Methode stockholders, according to the filing.

Aside from a hot technology, which is integrated into the optical networking products of other companies such as Agilent (NYSE: A) and Lucent (NYSE: LU), Stratos also has strong financials. For the fiscal year ended April 30, the company had net income of $3.8 million on revenue of $71.8 million in 2000, as opposed to net income of $3.5 million on revenue of $46.4 million in 1999.

The company's sales are concentrated in three primary customers; for the 1999 fiscal year, Nortel (NYSE: NT), Cisco (Nasdaq: CSCO) and Alcatel (NYSE: ALA) accounting for 27 percent, 10 percent and 6 percent of net sales, respectively.

The company's competitors include Agilent, Finisar Corp. (Nasdaq: FNSR), Infineon Technologies Corp. (NYSE: IFX) and IBM (NYSE: IBM) for optical subsystems. In the market for optical components, Stratos competes with Infineon, Lucent, Molex, Inc. (Nasdaq: MOLX) and Tyco International, Ltd. (NYSE: TYC).

About 62.8 million shares of common stock will be outstanding after the offering, giving it an initial market capitalisation of more than $1 billion based on a $17 per share initial price, the midpoint of the set range.

The underwriters, led by Lehman Brothers, have been given the option to buy about 1.3 million extra shares to cover over-allotments in the event of heavy demand.

Among other IPOs Tuesday:

  • ClickSoftware (Nasdaq: CKSW) rose 3 11/16 to 17 11/16 in its debut Tuesday.

    It priced shares at $10 each, the middle of its range of $9 to $11 range.

    "Its in a good category," said Kenan Pollack of IPO Central. "Its listing Seimens as a competitor, which has been on a tear lately," he added. The category may be a bit out of vogue now though, Pollack added; Exelis, Firepond and Witness Systems all had their IPOs a few months ago.

    The company's partnerships with Agilent (NYSE: A) and Compaq (NYSE: CPQ) also put it in good stead. There's also the speculation that ClickSoftware would make a good acquisition for Sieble or SAP.

    Like most companies going public, ClickSoftware has hefty losses. For 1999, the company lost $8 million on sales of $10.3 million.

    The Israel-based company is 23 percent owned by Oak Investment Partners; co-founder and CEO Moshe Ben-Bassat owns 22 percent.

    Its competitors include Inference Corp. (Nasdaq: INFR), Peregrine (Nasdaq: PRGN) and Siebel Systems (Nasdaq: SEBL) according to Hoover's Online.

  • eFunds Corporation (Nasdaq: EFDS) closed unchanged at 13 in its initial public offering Tuesday.

    It priced at $13 each, below their original $14-16 range. The offering, which was cut in size from 6.25 million shares to 5.5 million shares, is a spinoff of the debit processor unit of Deluxe Corporation (NYSE: DLX).

    eFunds provides end-to-end electronic debit payment software to retailers, e-commerce providers, and the banking industry, which accounted for about 37 percent of sales in 1999.

    For the year ended December 31, the company had a net loss of $8.2 million on sales of $302.3 million, as opposed to a loss of $14.6 million on sales of $267.5 million in 1998.

    The company faces lots of competition in the electronic payment management market, from third-party network and credit card processors, including First Data (NYSE: FDC) and EDS (NYSE: EDS); financial institutions that have developed in-house processing capabilities, such as Bank of America,; electronic data interchange and cash management providers, including Fiserv (Nasdaq: FISV) and CheckFree (Nasdaq: CKFR); and electronic bill payment providers, such as MasterCard and Visa.

    The offering's underwriters include Lehman Brothers, Bear, Stearns & Co. Inc., FAC/Equities and John G. Kinnard and Company.

    Deluxe has said it will distribute eFunds stock to Deluxe's shareholders through a tax-free exchange.
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