Initial Story on DRTN:
biz.yahoo.com
Data Return jumps 46 percent in IPO
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NEW YORK, Oct 28 (Reuters) - Web hosting company Data Return Corp. jumped 46 percent in its stock market debut on Thursday as investors continued to place a high value on Internet offerings.
Data Return raised $81.25 million in its initial public offering by pricing 6.25 million shares at $13 each. The stock jumped to $19 when it opened and had settled back to about 18 by late morning. Trading volume was 6.4 million shares.
The IPO priced at the top of its original range of $11-$13 per share. Earlier this month the company lowered the range to $10-$12.
Some analysts said they were surprised the stock did not jump even higher. They said the Web hosting sector is hot among investors because of its revenue growth potential.
''The opportunities are tremendous,'' said Michele Pelino, senior analyst with Yankee Group. The pop in Data Return's stock price was based on a rapidly growing market for its Internet hosting services, she said.
''As more and more companies recognize the opportunities that exist online, they recognize that they need an online presence. But they know that they don't necessarily have the in-house capabilities to support it,'' Pelino said. ''So they go to the hosting providers.''
Arlington, Texas-based Data Return provides its services based on technologies developed by Microsoft Corp. (NasdaqNM:MSFT - news). According to federal filings, Data Return has hosted Web sites for companies as large as Boeing Co. (NYSE:BA - news), Microsoft and Motorola Inc. (NYSE:MOT - news)
As of May, Data Return said it hosted more than 1,200 Web sites for more than 650 customers.
''I thought it would get a bigger opening price,'' said Irv DeGraw, research director at WorldFinanceNet.com, a financial information provider.
''When I look at what is going on with some of the others (in this sector), like Breakaway Solutions, NaviSite, Digital Island, I thought it would have a larger gain,'' he said. ''This is a good company, albeit small.''
Shares of Breakaway Solutions Inc. (NasdaqNM:BWAY - news), NaviSite Inc. (NasdaqNM:NAVI - news) and Digital Island Inc. (NasdaqNM:ISLD - news) also rose on Thursday, each rising at least two points.
Data Return has said it will use proceeds from the IPO in part to expand sales and marketing activities and repay a $210,000 credit facility.
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So perhaps we have a baby version of ISLD, NAVI, or even EXDS?
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