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IPO Roundup: Network Engines and Triton see strong debuts

Web server appliance maker Network Engines (Nasdaq: NENG) jumped 13 to 30 after it priced 6.5 million shares at $17 for trading Thursday, at the top of its new price range, which was boosted to $16 to $17 a share late Wednesday. The company had planned to sell 5.5 million shares of at $13 to $15 each.

"Companies involved in pushing content faster have been one of the best categories this year," said Kenan Pollack, of IPO Central, citing Akamai (Nasdaq: AKAM) and CacheFlow (Nasdaq: CFLO) as similar companies.

The company, which develops computer server appliances and related software for Web hosting, application service, and Internet service providers, has licensing agreements with several big name companies such as IBM (NYSE: IBM), Micron Electronics (Nasdaq: MUEI), and VA Linux (Nasdaq: LNUX).

Though Network Engines is losing money, its revenue shows strong growth. For the year ended December 31, the company had a net loss of $5.8 million, on revenue of $6.0 million, as compared to a loss of $4.2 million on revenue of $1.1 million in 1998. The company's accumulated deficit as of March 31 was $17.2 million.

The company's revenue is concentrated in a limited number of customers. In fiscal 1999, sales to InterVu (Nasdaq: ITVU), IBM (NYSE: IBM), and Microsoft's (Nasdaq: MSFT) WebTV accounted for 46 percent, 28 percent and 14 percent of net revenue, respectively.

Network Engines said it expects increasing consolidation in the server appliance industry, and foresees competition from Compaq (NYSE: CPQ), Dell (Nasdaq: DELL), IBM (NYSE: IBM), Hewlett-Packard (NYSE: HWP) and Sun Microsystems (Nasdaq: SUNW). These may develop their own server appliance solutions, or acquire current competitors, including smaller private companies. For example, Whistle, a server appliance company, was recently acquired by IBM.

After the offering, there will be 32.9 million outstanding shares.

The IPO is being handled by Donaldson Lufkin & Jenrette, Dain Rauscher Wessels, Robertson Stephens and DLJdirect.

Among other IPOs Thursday:

  • Triton Network Systems (Nasdaq: TNSI) rocketed 160 percent, up 24 to 39. The company priced its IPO at $15, above the original $10-12 range which was later revised to $13-15. The 6.5 million share offering will open for trading Thursday.

    For the three months ended March 31, the broadband wireless local loop maker company had net loss of $10.9 million on revenue of $3.5 million. As the company recorded its first revenue in the first quarter of 2000, growth is still hard to evaluate.

    Triton depends on Advanced Radio Telecom, CenturyTel and CAVU for substantially all of our sales, and warned the loss of just one customers could impact business significantly.

    The company's competitors include Digital Microwave Corp. (Nasdaq: DMIC), Harris Corporation (NYSE: HRS) and P-Com, Inc., as well as a number of smaller companies that have developed or are developing competing products.

  • I-many (Nasdaq: IMNY), which provides contract management software primarily to the health care industry, was up 15/32 to 9 15/32. The company had priced at $9 a share, at the bottom of its expected range. The company had planned to sell its 7.5 million shares for between $9 and $11each. Robertson Stephens served as the lead underwriters on the pricing.

    Almost all of I-many's, formerly SCC Technologies, clients are pharmaceutical companies. In 1999, more than half of the company's sales came from its proprietary Contract Administration and Reporting System (CARS); the rest came from related services.

    For the year ended December 31, the company had a loss of $5.1 million on revenue of $19.4 million, as opposed to a loss of $1.7 million on revenue of $13.5 million in 1998.

    The company's primary competitors include internal information systems departments of its customers that develop custom software, software companies that target the contract management markets and professional services organizations.
    • IPO Insider >