Over the past few years, there has been a spate of DSL (digital subscriber
line) IPOs. Despite the fact there is a major shift towards broadband, the
DSL market has been tough lately. True, the technology uses existing copper
wire infrastructure. But there are problems. It is not completely
reliable, especially at long distance. Other problems include peak traffic
degradation and cross talk.
In light of this, the Elastic Networks
IPO looked iffy. Although, the company is not a pure
DSL provider; rather it uses advanced Ethernet solutions. The result?
Apparently, the technology cures the many problems with traditional DSL. To
add credibility, the company is a unit of Nortel Networks.
Unfortunately, IPO investors did not seem convinced. The offering price was
$13, as the company raised $85 million. On its first day of trading, the
stock ended up a mere 7%.
Actually, the company looks like a good prospect at these levels, though.
Its patented technology appears to be strong and the backing of Nortel
should lead to strong revenue growth over the long-term.
Another early stage IPO was Genomica
. The company is a developer of bioinformatics
technologies, which helps to make sense of the billions and billions of DNA
sequences from the human genome. The company’s software suite is
comprehensive and is the result of 15 years of research. So far, the
company has been able to attract big customers such as Glaxo Wellcome,
Warner Lambert, the National Cancer Institute, the National Institute of
Health, and Orchid Biosciences.
But the IPO was not spectacular. On its first day of trading, the stock was
up 21% (although, the company did raise $122 million). Then again, the
company is in the incipient stage and will take time to see tangible
results.
You can see a more in-depth analysis in a prior IPO Tracker
column.