Universal Access Inc. (Nasdaq: UAXS), a telecommunications company that buys and sells unused network capacity, gained 19 3/16 to 33 3/16, or 137 percent after it priced shares at $14 for trading Friday.
The Universal Access initial public offering priced above its raised range of $11-13.
The company, which is backed in part by Web venture firm Internet Capital Group Inc. (Nasdaq: ICGE), raised the number of shares it will sell by 1 million to 11 million shares. The initial pricing range had been $8 to $10 a share.
The offering, underwritten by Goldman, Sachs & Co, will leave about 85.8 million shares outstanding in the company.
The offering is expected to do well, based on the company's unique business model; Universal Access acts as an intermediary for telcos focusing on building a customer base, and those focused on building networks. It buys excess telecom circuits from network providers and then resells it to service providers who need it.
"It is unique," said Paul Bard, an analyst at Renaissance Capital. "And it has the advantage of being one of the first to move in this space." The market for providing a link between carriers and suppliers is large and growing, and Universal Access has the advantage of being independent, as opposed to some of its competitors, such as Cisco (Nasdaq: CSCO), Bard said. Though the company does have big losses, "It also has a recurring revenue model, and is signing up customers for long-term contracts, of about five years," which makes it a better investment than a software company, he added.
The company's revenue have boomed, but so have losses. For the year ended December 31, the company had a net loss of $20.5 million on revenue of $14.9 million, as opposed to a loss of $3 million on revenue of $2.3 million for 1998.
Current and potential competitors include national and local carriers, such as AT&T (NYSE: T), Broadwing (NYSE: BRW), MCI WorldCom (Nasdaq: WCOM) and Williams Communications (NYSE: WCG); companies that provide co-location facilities, such as AboveNet Communications (MFN), Equinix, Exodus Communications (Nasdaq: EXDS), Frontier Global Center, and Intel (Nasdaq: INTC); competitive local exchange carriers, such as ELI, ICG Communications (Nasdaq: ICGX), NextLink Communications (Nasdaq: NXLK), and incumbent local exchange carriers, such as GTE (NYSE: GTE) and Sprint (NYSE: FON).