Akamai, a maker of software that helps speed the delivery of Web pages, enjoyed one of the best initial public offerings ever Friday as its shares soared fivefold in their first day of trading.
In its IPO, the company issued 9 million shares at $26. The 458 percent increase ranks fourth on the list of biggest gains for a U.S. stock in first-day trading. With the distinction, Akamai eclipsed a 386 percent gain by Sycamore Networks on October 22.
After today's close, the 18-month-old company has a market capitalization of more than $15 billion.
Cambridge, Massachusetts-based Akamai had raised its IPO range three times, most recently on Wednesday, when it upped its range to $21 to $23 per share and also increased the number of shares it would offer to 9 million from 8 million. Last week Akamai increased its price range to $16 to $18 a share, up from its original range of $11 to $13.
Based on the $26 offering price, Thomson Leighton, the company's chief scientist, had a stake worth $249.6 million; Daniel Lewin, the company's chief technology officer, had a stake worth $247 million. Leighton is a professor at the Massachusetts Institute of Technology now on sabbatical, and Lewin is a doctoral candidate there.
Akamai--pronounced "ACK-uh-my," a Hawaiian word that means clever or cool--sells FreeFlow, a service that speeds Internet delivery by linking 1,475 computer servers in 24 countries through 55 telecommunications networks. Companies such as Yahoo and CNN.com place their content on those servers.
Akamai says it can help Web sites transmit data 2 to 10 times faster than current delivery speeds because it routes transmissions around busy points of the Internet. Akamai is one of several new Web-caching companies, so called because content is "cached," or stored, on computers linked to the Internet. More are likely to go public as demand for their services increases, analysts said.
The company had $1.29 million in revenue in the nine months ending September 30, mostly from contracts with Apple Computer and Yahoo, and lost $28.3 million before paying deferred stock dividends. In the same period a year ago, it had no revenue and lost $890,000.
Akamai, which trades on Nasdaq under the symbol "AKAM," has several industry giants in its corner. For example, Cisco Systems in August entered into a strategic alliance with the company to develop new content routing, switching, and caching technologies to accelerate the delivery of Web content.
Akamai's IPO comes at a time when the small yet competitive Internet content distribution industry is in rapid flux. Analysts expect the nascent market, which revolves around getting Web content to end users faster by keeping it off the most congested parts of networks, to grow to $2.5 billion by 2002.
Bloomberg contributed to this report.