Simplex IPO shoots up 77%

May 2, 2001: 4:33 p.m. ET

Verification software provider gains $9.20 to $21.20, best IPO this year

NEW YORK (CNNfn) - Simplex Solutions Inc., a provider of verification software, surged 77 percent Wednesday, becoming the best performing IPO this year.

Simplex gained $9.20 to $21.20 while Briazz Inc., a seller of branded foods, closed nearly flat at $8.03 on the Nasdaq.

Simplex's performance is the strongest since the IPO from Transmeta Corp., a mobile chip maker, which rose 115 percent on Nov. 7, according to CommScan, a New York-based investment banking research firm.

Technology deals have been absent in the IPO market this year, and analysts were surprised by Simplex's huge pop. The company, which provides design verification software and services for chip firms, is a pure-play tech deal.

Simplex is the second tech IPO this year. The last one, Verisity Ltd., also provides technology to verify the designs of chips. Verisity (VRST: up $1.64 to $17.00, Research, Estimates) made its market debut in March when it gained 20 percent.

"This is kind of amazing," said Corey Ostman, co-CEO of Alert-IPO.com. "We've seen the technology market somewhat stabilize."

While successful, the Simplex IPO alone will not be enough to spur a rebound for new issues. "If we see more techs do well this will provide some sort of a footing for the IPO market," Ostman said.

Simplex came in at the top of its range late Tuesday, selling 4 million shares at $12 via lead underwriter Credit Suisse First Boston. Simplex had planned to offer 4 million shares at $10-to-$12 each.

Customers such as Intel Corp., Sony Corp. (SNE: up $2.40 to $82.38, Research, Estimates), and Sun Microsystems (SUNW: up $1.46 to $20.44, Research, Estimates) use Simplex's software and services for testing the design of integrated circuits.

Sunnyvale, Calif.-based Simplex (SPLX: Research, Estimates) had $7.1 million losses on $20.8 million of revenue for the six months ended March 31.

After the IPO, Intel Corp. (INTC: up $0.76 to $31.94, Research, Estimates) will hold a 4.3 percent stake, while entities affiliated with the Mayfield Fund will have 16.1 percent.

A Dutch auction
Briazz Inc., which sells branded lunch and breakfast foods, raised $16 million late Tuesday ahead of its IPO.

Briazz came in at the bottom of its $8-to-$12 range, selling 2 million shares at $8 each via lead underwriter WR Hambrecht.

Seattle-based Briazz (BRZZ: Research, Estimates) operates 40 cafes in San Francisco, Chicago, Los Angeles, and Seattle, where it sells its sandwiches, salads and soups.

Briazz used a Dutch auction to sell its shares. The process, in which the price of the shares is gradually lowered until it meets a bid and gets sold, is meant to ensure an efficient and fair marketplace for selling shares in an IPO.

Briazz is hoping to emulate the success of Peet's Coffee & Tea Inc. which went public in January, gaining 17 percent. Peet's (PEET: up $0.10 to $9.60, Research, Estimates) also used a Dutch auction to sell its share.