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AsiaInfo, UTStarcom IPOs surge

AsiaInfo and UTStarcom, two Internet infrastructure companies focused on China, moved sharply higher in their market debuts Friday.

AsiaInfo (Nasdaq: ASIA), based in Beijing, was up 82, or 342 percent, to 106 on its opening day.

UTStarcom (Nasdaq: UTSI), which sells telecom equipment to wireless and wireline service providers in China, was up 48 9/16, or 270 percent, to 66 9/16.

AsiaInfo, which provides telecommunications infrastructure software and services, priced 5 million shares at $24, the top of its increased range of $18 to $20. Morgan Stanley Dean Witter was the lead underwriter.

In filings, AsiaInfo said it is the largest network software vendor in China and has a proven track record because it built ChinaNET, China's first commercial and largest national Internet backbone.

The company's products include messaging, billing and customer management software. AsiaInfo has sold 1.8 million customer management and billing software licenses, 9 million licenses of its messaging software, and 7 million licenses of its wireless telephony billing and customer management software.

With its first mover advantage, AsiaInfo has recorded some impressive sales. For the year ending Dec. 31, AsiaInfo reported sales of $60.3 million with a loss of $4.9 million. The company had been profitable in 1998, but didn't make any guarantees about future profits because of research and development spending and other investments.

Major competitors for systems integration include local players Suntek and Aotian as well as U.S. information technology powerhouses such as IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HWP). For billing software, AsiaInfo cited Portal Software (Nasdaq: PRSF) as its main competition. On the messaging front, AsiaInfo competes with Software.com (Nasdaq: SWCM) and Netease.

UTStarcom priced 8 million shares in the United States and 2 million shares in Japan. Merrill Lynch was the lead underwriter, and Softbank, which owns a stake in ZDNet, owns a stake in UTStarcom. Shares priced at $18, the top of its raised $16 to $18 price range.

According to regulatory filings, UTStarcom offers a suite of network access systems, optical transmission products and subscriber terminal products that enable voice, data and Internet access services.

UTStarcom, based in Alameda, Calif. with manufacturing facilities in China, outlines the growth prospects quickly -- there are seven phone lines in China per 100 people. That statistic means there's a lot of room for growth in a country with a population of 1.3 billion.

Chinese service providers have installed over 900,000 lines of the company's Airstar wireless access system and 1.2 million lines of its wireline AN-2000 access system.

That customer base has led to some strong revenue totals. For the year ending Dec. 31, UTStarcom reported sales of $187.5 million and a loss of $18.5 million. Expenses are typically denominated in Japanese yen and U.S. dollars, while sales are usually in the Renminbi, China's currency.

The competition for UTStarcom is fierce. The company cites Alcatel (NYSE: ALA), Ericsson (Nasdaq: ERICY), Lucent Technologies (NYSE: LU), Motorola (NYSE: MOT), Advanced Fibre Communications (Nasdaq: AFCI), Nokia (NYSE: NOK), Cisco Systems (Nasdaq: CSCO), Nortel Networks (NYSE: NT) and dozens of local companies as competition.