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ONI sparkles in its debut
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June 1, 2000: 7:46 p.m. ET
California optical networking maker climbs sharply; Crossworlds inches up
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NEW YORK (CNNfn) - ONI Systems Corp., an optical networking equipment provider, boomed on its opening day in the biggest initial public offering debut since March.
ONI Systems jumped 57-9/16, or 230 percent, to 82-9/16, with more than 16 million shares changing hands, fulfilling its promise as the 400-pound gorilla of the IPO week.
ONI, of San Jose, Calif., raised $200 million in its public offering that was priced above the target range. ONI Systems opened at 73 after pricing 8 million shares at $25 each through underwriters led by Goldman Sachs. The stock hit 84 in early trading and recently fetched 81 7/16 on volume of 8 million shares. Price talk was $21-to-$23 a share, up from the originally filed $14-to-$16 each.
ONI Systems was expected to price its shares last week, but held off.
"This is an example of an experienced underwriter timing the deal in all but an absent market," said Ben Holmes, president of ipoPros.com. "They held back until they knew it was a good market to launch the IPO."
Holmes credited ONI's strong performance to the general strength of the fiber optic networking sector. "Optical networking is the gold standard in the IPO market," he said. "Nothing is garnering more interest or getting higher premiums."
ONI Systems debut follows a good performance by New Focus (NUFO: Research, Estimates), a manufacturer of fiber optic products for optical networks, which climbed by 155 percent in its market debut. New Focus opened May 19 at 40 after pricing 5 million shares at $20 each through underwriters led by Credit Suisse First Boston. New Focus shares slipped 3-5/8 to 61 in Thursday trading on the Nasdaq.
The power of fiber optics
ONI Systems (ONIS: Research, Estimates) provides optical networking equipment to communications providers to relieve traffic bottlenecks on metropolitan and regional networks.
Customers include Williams Communications, COLT Telecom, Marietta Fibernet and StorageNetworks. Competitors include Alcatel, CIENA, Cisco Systems, Juniper Networks, Lucent Technologies, Nortel Networks, Siemens, Sycamore Networks and Tellabs.
For the three months ended March 31, ONI reported a net loss of $34.2 million on revenue of $3.6 million, compared with a net loss of $4.8 million on revenue of $565,000 for the same time period in 1999.
Crossworlds inches up
Crossworlds Software raised $40 million after pricing at the bottom of the range. Burlingame, Calif.-based Crossworlds (CWLD: Research, Estimates) opened unchanged after pricing 4 million shares at $10 each through underwriters led by Chase Hambrecht & Quist. The stock hit 10-3/4 in early trading but retreated to finish just 1/8 higher. Price talk was $10-to-$12 a share, down from the original $14-to-$16.
Crossworlds Software offers e-commerce infrastructure software that lets companies integrate and automate business processes within companies, and among their customers and suppliers. Crossworlds said its software helps companies cut information technology costs, increase productivity and improve responsiveness to customer demands.
For the three months ended March 31, Crossworld reported net losses of $10.9 million on revenue of $7.7 million, compared with a net loss of $7.3 million on revenue of $3.6 million for the same time period in 1999. On March 30, the company had an accumulated deficit of $106 million.
On Wednesday, First Horizon Pharmaceutical Corp. (FHRX: Research, Estimates) opened at 8 after pricing 3.8 million shares at $8 through underwriters led by Chase H & Q. Price talk was $8-to-$10 a share, down from the original $12-to-$14 each. First Horizon shares closed at 8-1/16, up 1/16, in Nasdaq trading Thursday.
And now the down side...
UbiquiTel Inc., of Bala Cynwyd, Pa., cut the price range of its deal to $8-to-$10 from $12-to-$14. UbiquiTel provides Sprint PCS digital communications services in midsize market. Shares will trade under the proposed symbol UPCS.
Online human resources company Exult Inc. cut its price range and number of shares for the second time. The Irvine, Calif.-based company now plans to offer 6 million shares for $10-to-$12. Its original projection was 14 million shares between $14 and $16. The company is now expected to make about $66 million, rather than $210 million.
The lead underwriter for the deal is Merrill Lynch and the company will trade under the symbol EXLT.
Manufacturer Services Ltd., of Concord, Mass., shaved about $20 million off its offering by cutting its price range to $15-to-$17 from $17-to-$19. With 11 million shares offered the company can expected to raise about $162 million instead of about $183. The firm will trade under MSV and the deal is led by Donaldson Lufkin & Jenrette.
On Thursday, Digitalwork.com, a provider of online business services to the small business market, decided to pull its planned IPO due to poor market conditions. Chicago-based Digitalwork.com had planned to offer 6.25 million shares at $11-to-$13 each through underwriters led by Lehman Brothers. The company's proposed Nasdaq symbol was DWRK.
Also withdrawing is the proposed $57.5 million IPO of software company 2Bridge Inc. (TOBE) The San Francisco-based company also decided market conditions were too tough at the present time. 
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