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Tellium IPO soars 40%
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May 17, 2001: 4:35 p.m. ET
Optical switching gear maker prices at $15, gains $5.93 to $20.93
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NEW YORK (CNNfn) - Tellium Inc., a maker of optical switches, shot up nearly 40 percent Thursday as the week's third initial public offering began trading.
Tellium shares hit a high of $23.15 before falling and closing at $20.93, a gain of $5.93, on the Nasdaq.
The company raised $135 million when it sold 9 million shares at $15 each via lead underwriters Morgan Stanley and Thomas Weisel Partners. The company had planned to offer 7.5 million shares at $13 to $15 each.
Two other IPOs, Satyam Computer Services Ltd. (SAY: up $0.39 to $12.18, Research, Estimates) and Kinder Morgan (KMR: up $0.48 to $70.90, Research, Estimates), produced strong premiums earlier this week.
Tellium is also the third firm to post strong gains among new issues. Earlier this month, Simplex Solutions Inc. surged 77 percent to $21.20 in its market debut, while Verisity Ltd. in March rose nearly 20 percent.
"This is an enormous statement about the health of the IPO market," said David Menlow, president of IPOfinancial.com. "The worst of the market is behind us."
Tellium will not likely turn around new issues, but will serve as another building block. "This bodes well for Instinet and the IPO market as a whole," he said.
The much anticipated offering from the 24-hour global brokerage is expected to price Thursday and trade Friday. Instinet, a Reuters unit, plans to selling 29.5 million shares at $11.50-to-$13.50 a share via lead underwriters Credit Suisse First Boston and Deutsche Banc Alex. Brown.
Oceanport, N.J.-based Tellium (TELM: up $5.93 to $20.93, Research, Estimates) develops and markets high-speed optical switches used by telecommunications providers to manage the flow of optical signals.
Tellium's three clients are Cable & Wireless Global Networks, Dynegy Connect LP, and Qwest Communications (Q: up $0.82 to $37.82, Research, Estimates).
Tellium had a loss of $49.8 million on revenue of $15.6 million in the quarter ended March 31. The optical chip maker has also racked up $156 million accumulated losses by the end of 2000.
After the IPO, Lucent Technologies (LU: up $0.08 to $9.81, Research, Estimates) will hold a 7.6 percent stake.
Tellium's $900 million backlog, signifying the strength of their customer's commitment, helped the IPO shoot up, said Francis Gaskins, editor of Gaskins IPO desktop (www.GaskinsCo.com) in Los Angeles.
"Tellium still has to continue to perform but there is a good chance they will do well," he said. 
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