F5 Networks, Juniper Defy Gravity
Page 1 of 1
In mid-July we saw that shares of most Internet companies which had launched IPOs in the previous three months - 45 of 75, or 60%, to be exact - were trading above their respective first-day closing prices.
That, however, was just at the beginning of the mid-summer swoon which dragged Internet stocks well into August, and may not be over yet, despite last week's mini-rally.
Based on this monthlong slump, I expected the latest after-market figures, as reflected in internet.com's IPODEX, to have a much redder hue to them.
But they don't. In fact, 47 of the 86 listed in the IPODEX ended trading Friday above their first-day closing price. That's 55%, just slightly off the pace in early July, when the market was hotter, and substantially better than the 30% (17 of 57 companies) in June, when the spring slump was in full swing.
- F5 Networks (June 4) - 269%
- HotJobs.com (Aug. 10) - 142%
- Stamps.com (June 25) - 134%
- Software.com (June 24) - 126%
- Juniper Networks (June 25) - 109%
- Viant (June 18) - 88%
- Mail.com (June 18) - 83%
- Digital Island (June 29) - 82%
- GoTo.com (June 18) - 78%
- CyberSource (June 24) - 77%
There are two remarkable stories here. One is F5 Networks (FFIV), a vendor of server load-balancing software. The Seattle-based company's stock easily had the best after-market performance of all recent Internet issues through July 9, trading at $50.75, or 241% above its first-day closing price of $14.88.
As of Friday, F5 shares were even higher, closing at $54.88. That slight increase is deceiving, for F5 went on a wild ride between July and August, closing as high as $71.25 on July 15 before plunging to as low as $29.88 by Aug. 9. One week later, F5's shares were at $59, nearly doubling in a week.
The other fascinating story comes from Juniper Networks, which is now the only Internet stock trading above $200 per share. Juniper earned its 109% after-market performance through Friday the hard way: The Internet backbone router vendor had one of the best debuts of 1999, closing on June 25 at $97.88 after being offered at $34 a share.
It has performed even more impressively since closing on July 9 at $132.75, cracking the $200 barrier on Aug. 13 and reaching its all-time high Monday of $225.25.
Obviously both companies are benefiting from the market's affinity for infrastructure plays. A Wall Street Journal article last week said that 94 non-retail Internet companies were up about 71% from their offer prices, compared to a 28.3% average gain for 40 online retailers, based on a study by Thompson Financial Securities Data.
But Kenneth Heebner, a portfolio manager for Capital Growth Management, rightly told the Journal that investors are taking a chance because they're betting as if they think all infrastructure companies will be winners.
That's a risky assumption when you're talking about a company like Juniper, which competes directly with the 800-pound gorilla of networking, Cisco Systems.
For now, though, I'd feel pretty good if I were a Juniper investor. Ijust wouldn't buy in now.
Introducing Internet StockTracker, the new weekly e-mail newsletter from internet.com Corp. Every Friday internet.com will deliver to your e-mail in-box the latest performance data on individual Internet companies and their competitors. Internet StockTracker will deliver to you all the statistics you need to assess the week's activity. Subscribe today and receive the Charter Rate of $157 -- a savings of $70 off the regular subscription price! e-newsletters