|
Cobalt IPO rockets
|
 |
November 5, 1999: 1:50 p.m. ET
Server appliances developer's stock soars 618% in early trade
|
NEW YORK (CNNfn) - Cobalt Networks stock took off for the sky Friday morning in its first day on the market, rising as much as 618 percent above its $22 initial public offering price in morning trade.
By midday, shares in the server appliances developer had eased somewhat but still were up 484 percent at 128-1/2. Earlier, the stock had climbed as high as 158 on the Nasdaq on volume of over seven million shares.
High demand for the offering was evidenced prior to the IPO pricing, when the company raised its expected price range to $20-$22 from $14-16.
Through its lead underwriter Goldman Sachs, the Mountain View, Calif.-based company raised $110 million by offering 5 million shares, which represent an 18 percent stake in the firm.
Cobalt produces network infrastructure devices known as server appliances, which use the free Linux operating system and are designed to deliver select network-based applications well.
Its principal product lines, the Cobalt Qube and Cobalt RaQ, enable customers to perform Internet-related functions such as file serving, Web hosting and providing software applications over the Internet including e-mail and electronic commerce.
The Linux tie is critical to the company's success as big hardware and software makers are expanding their ties to the open-source system, which won IBM's endorsement in February.
"They've got all the magic words between appliances and Linux, but there is also some meat behind this. It's not just smoke and mirrors; it's a real business. We're seeing more and more of these companies moving away from ephemeral dot.com businesses and getting into real businesses," said Irv DeGraw, research director at WorldFinanceNet.com.
"It's more than just networking. What they are doing is building Linux appliances, which has real cost-saving (potential) for Web site operators. They are looking to attack the market early and hard. That was the Netscape strategy and the Amazon.com strategy," DeGraw added.
Cobalt's competitors include VA Linux, Dell Computer, Intel and Sun Microsystems. Chase Venture Capital is among Cobalt's investors.
In 1998, the company reported a net loss of roughly $10.5 million on $3.5 million in revenue.
-- from staff and wire reports
|
|
|
Cobalt Networks
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
