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Accelerated Networks sizzles in debut

Broadband access equipment maker Accelerated Networks (Nasdaq: ACCL) closed up 32 7/8, or 219 percent, to 47 7/8 Friday in its initial public offering.

It priced its IPO at $15 a share, above its range of $11-13. The range of the 4 million shares was revised upward from an original $9 to $11 a share.

Nominated Renaissance Capital's IPO of the week, the company has a hot technology that enables service providers to deliver both voice and data services to a customer over a single circuit. This ability is appealing to network providers who have focused exclusively on voice or data services and are looking to expand their offerings.

Like most young companies, Accelerated Networks' sales are concentrated in a few companies; sales to to CTC Communications Group, Inc. (Nasdaq: CPTL), FirstWorld Communications and Siemens ICN, accounted for approximately 54 percent, 20 percent and 16 percent of total revenue, respectively, for fiscal 1999. Siemens, also a customer, owns 20 percent of the company. The company is currently undergoing product trials at networking giants US West (NYSE: USW), AT&T (NYSE: T) and MCI WorldCom (Nasdaq: WCOM).

The company has a limited operating history, and is racking up losses. Incorporated in October 1996, the company did not begin shipping our products in volume until June 1999. For the fiscal year ended December 31, 1999, revenue was $8.5 million, and a net loss, $21.2 million. As of March 31, the company had an accumulated deficit of about $51.2 million.

Qualstar's top competitor's include Alcatel (NYSE: ALA), Cisco (Nasdaq: CSCO), Copper Mountain (Nasdaq: CMTN), Nortel (NYSE: NT) and Lucent (NYSE: LU).

The deal's lead underwriter is CS First Boston; Co-managers include Dain Rauscher and Warburg Dillon Read.


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