Even the washout in the Nasdaq is not likely to derail this week’s IPO of
Ixia. Why? Well,
the company is in the marketplace of fiber optics. And so far, the industry
has been on a tear.
The lead underwriter is Merrill Lynch and the price range is $10-$12 (the
company intends to issue 5.5 million shares). The proposed ticker symbol is
XXIA.
According to the company, Ixia is a provider of “high-speed, multi-port
network performance analysis systems.” Okay, what does this all mean? Yes,
it is complex stuff. But here’s a try: With the huge volume of Internet
traffic, there has been the emergence of next generation network equipment.
However, before using the equipment, it needs to be tested, which is what
Ixia does. For example, with Ixia solutions, a company can measure the
performance of a data communications system by simulating a large-scale
network environment. The Ixia solution includes a chassis and at least one
interface card – all connected to a network. Ixia can analyze both packet
over SONET networks (packets of information are transmitted over high-speed
optical networks) and gigabit Ethernet networks (high-speed local area
networks).
The company has more than 170 customers; examples include Cisco, Nortel
Networks, Broadcom and UUNet. And the growth rate is red hot. In 1998,
revenues were $4.9 million and by 1999, they were $24.5 million. In the
fist six months of 2000, revenues surged to $28.3 million. Net profits were
$5.7 million.
But there are some danger signs. Perhaps the most interesting is the
lock-up. Traditionally, employees, directors and officers are prohibited
from selling their holdings for 180 days after the IPO. However, in the
case of Ixia, the term is 90 days. In other words, this could put pressure
on the stock price. After all, the average stock price for employees is 5
cents per share.
Despite this, the IPO is likely to have a decent pop this week. And, when
the Nasdaq does come back, Ixia should also ride the wave.