From Briefing.com:
ragingbull.com
StorageNetworks (STOR) : Successful public debuts by a handful technology companies over the past three weeks has
helped to pry open the IPO window. This week alone, more than a dozen companies have plans to offer their shares to the
public for the first time... One of the most anticipated offerings of the week will be made by StorageNetworks. The provider
of managed data storage services is set to sell 9 mln shares at $23-$25 apiece, up from the original $17-$19 range. Deal
has everything that investors and traders look for in an IPO: strong lead underwriter (Goldman Sachs); an impressive
customer list (EMC, Yahoo!, Merrill Lynch); breakneck growth (revenues rose 1100% in latest qtr to $4.6 mln); and an
titillating company profile (company seen as a play on both fibre and storage)... StorageNetworks should have been the
hottest deal to hit the market this week... While stock is still expected to race out of the gates, initial gains will be far less
robust than originally anticipated. To blame for reduction in enthusiasm is the company's primary customer -- EMC Corp
(EMC). In a letter sent to StorageNetworks last week, EMC has alleged, among other things, that StorageNetworks has
misrepresented that EMC is an investor in company, misappropriated confidential EMC information, targeted employees
of EMC for employment in violation of contractual commitments not to hire EMC employees and interfered with contractual
relationships between EMC and certain of EMC's customers. Although EMC has not brought legal proceedings against
the company, StorageNetworks believes that it is likely the professional services relationship with EMC will terminate or
not continue in the future on the same terms as it has in the past... In 1999, 40% of STOR's revenue came from EMC
customers. STOR expects that if its agreement with EMC is terminated, the company's total revenues may significantly
decrease and near-term quarterly results would be harmed... Possibility that EMC will terminate the relationship will not
prevent STOR shares from soaring on their first day. The problem is that when the relationship does come to an end, the
news will likely be released after the close of trading, causing a major gap down in STOR shares once trading resumes. --
Damon Southward, Briefing.com |
