Optical Communication Products (Nasdaq: OCPI) blsated up 71 percent, or up to 19.25 after it priced 10.5 million shares at the mid-point of its $10 to $12 range for trading Friday.
The maker of fiber-optic subsystems and modules for high-speed data transmission in metro area networks and LANs/SANs will face a tough market. The company priced its offering of 10.5 million shares at $11 in a week when most company's delayed or withdrew their IPOs.
Japanese telecom equipment specialist Furukawa Electric will own 63.2 percent of outstanding shares and 94.5 percent of the combined voting power following the offering.
The company has solid financials, and has recorded a profit every year since inception in 1995. Net income for the 9 months ended June 30 was $16.7 million on revenue of $69.06 million, as opposed to net income of $4.15 million on revenue of $23.33 million for the same period in 1999.
Revenue is concentrated in a few big customers; for the fiscal year ended September 30, 1999, the company's 10 largest customers accounted for about 70 percent of total revenue, with Cisco Systems (Nasdaq: CSCO), Alcatel (NYSE: ALA) and 3Com (Nasdaq: COMS) accounting for 22 percent, 10 percent and 10 percent, respectively.
Optical Communication's main competitors include Agilent Technologies (NYSE: A), Finisar (Nasdaq: FNSR), Infineon Technologies (NYSE: IFX), IBM (NYSE: IBM) and Lucent Technologies (NYSE: LU). The development of alternatives to fiber optic transmission from companies such as Alcatel (NYSE: ALA), Fujitsu, Lucent and Nortel Networks (NYSE: NT), could also pose a threat.
Lead Underwriter for the deal is UBS Warburg. Co-managers include J.P. Morgan and USB Piper Jaffray.
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