The IPO of the network equipment maker shoots up nearly 31% despite a volatile market
BigBand Networks (BBND) shares managed to jump 30.8% in their first day of trading on Mar. 15, even as investors remained jittery about the mortgage market and global economy.
The Redwood City, (Calif.) technology firm sold 10.7 million shares at $13 a piece, according to a press release after the market closed on Mar. 14. The shares zoomed up the next day to $17. In another sign of strong investor interest, BigBand's IPO launched at a higher price than its proposed $10 to $12 range, according to Renaissance Capital's IPOhome.com.
BigBand, which sells network equipment that enable cable operators and telephone companies to offer video, voice and data services, has already enlisted more than 100 customers globally, including Cablevision, Charter, Comcast, Cox, Time Warner Cable, and Verizon. The company is going public during a time when more of its customers are finding ways to provide video, Internet and phone services bundled together. Even telecoms like AT&T (T) are scrambling to get a piece of the action with plans to offer TV services in the coming years.
Big Band is planning to use the net proceeds from its IPO for the repayment of around $14 million in debt, for working capital, for capital expenditures, and for other general corporate purposes. The company may also use the money to fund acquisitions of complementary businesses, products or technologies.
The industry for selling such hardware and software is brutally competitive and already in the midst of consolidation. BigBand's rival Cisco Systems (CSCO), for example, said Nov. 18, 2005 that it bought Lawrenceville (GA)-based Scientific-Atlanta (SFA), which provides equipment for things like video distribution networks and video system integration.
BigBand Networks isn't the only technology outfit tapping the IPO market for funding recently. After much hype ahead of its initial public offering, the Kirkland (Wash.) wireless high-speed Internet service Clearwire (CLWR) gained value early but then lost ground in its first day of trading Mar. 8. Then the security services firm Sourcefire (FIRE) also had a shaky opening on Mar. 9 (see BusinessWeek.com, 3/9/07, "Sourcefire Blows Hot and Cold in IPO"). That could be because investors have been uneasy in volatile markets recently, given rising fears about the subprime mortgage mess and how it could affect the economy.