Tuesday August 1 4:55 PM ET
SpeechWorks IPO Drowns Out Other IPOs
By Denise Duclaux
NEW YORK (Reuters) - SpeechWorks International Inc.
(NasdaqNM:SPWX - news) spoke the language of discerning investors in its
initial public offering on Tuesday, winning them over with speech-recognition
software and high-profile pacts that drowned out the day's other new issues.
Stock of the company, whose software allows callers to get data or complete
transactions without another human on the other end of the phone, almost
tripled in value on the technology-rich Nasdaq. The shares surged more than
183 percent to close at 56-3/4, easily landing the title of top percentage
gainer on the Nasdaq.
``Speech recognition is not a new idea, but there are a number of factors out
there that are creating an explosive market opportunity,'' said Katherine
Egbert, an analyst at Thomas Weisel Partners, explaining that the advanced
software can now interpret human speech with a roughly 95 percent level of
accuracy.
Egbert added that the speech-recognition market is estimated to be worth
roughly $12 billion in the next five years. She pointed out that Nuance Communications Inc.
(NasdaqNM:NUAN - news), a competitor of SpeechWorks, is trading at more than $129 -- sharply higher
than its April initial public offering price of $17 each.
SpeechWorks has marketing and technology pacts with telecommunications giant AT&T Corp. (NYSE:T -
news), Internet services heavyweight America Online Inc. (NYSE:AOL - news) and Web telephony company
Net2Phone Inc. (NasdaqNM:NTOP - news). Those deals also make the three companies minority investors in
SpeechWorks.
``SpeechWorks really got hot with those deals,'' said Francis Gaskins, editor at IPO research site
www.gaskinsco.com. ''SpeechWorks announced all those deals in June. It's always good when an IPO does
interesting things during their IPO period, the dull ones come out and do nothing.''
SpeechWorks sold 4.75 million shares at $20 per share, above an already boosted pricing range of $17 to $19
per share, according to underwriter Chase Hambrecht & Quist. The company raised $95 million through the
deal.
SpeechWorks' customer list includes Apple Computer Inc. (NasdaqNM:AAPL - news), WorldCom Inc.
(NasdaqNM:WCOM - news) and Nortel Networks Corp. (NYSE:NT - news). The Boston, Mass.-based
company boosted its number of employees to 246 as of June 20 from 86 as of December 31, 1998, according
to a Securities & Exchange Commission filing.
SpeechWorks had total revenue of $5.1 million and a net loss of $6.1 million for the three-month period ended
March 31, compared with $3.3 million in revenue and a net loss of $2.5 million in the year-ago period. The
company has a market capitalization of about $1.65 billion based on 29 million shares outstanding and its
closing stock price.
Shares of Western Multiplex Corp. (NasdaqNM:WMUX - news), a high-speed communications equipment
maker, closed at 14, up 2 from their offering price. The Sunnyvale, Calif.-based company raised $90 million by
selling 7.5 million shares at the top end of its $10-$12 per share pricing range, according to underwriter
Salomon Smith Barney. In mid-July, Western Multiplex raised the price range to $10-$12 per share from
$10-$11.
Virage Logic Corp. (NasdaqNM:VIRL - news), whose embedded memory technologies are found in
computers, communications equipment and digital and Internet appliances, rose to 12-7/16, up 7/16 from its
initial public offering price.
The company had priced 3.75 million shares at $12, the middle of its expected $11 to $13 per share range,
according to underwriter Robertson Stephens. The Fremont, Calif.-based company raised $45 million through
the deal.
Tripath Technology Inc. (NasdaqNM:TRPH - news), which designs amplifiers for electronics systems, eked
out a gain of 1/16 to close at 10-1/16. The company had sharply lowered its initial public offering to 5 million
common shares from 7.5 million while dropping the price range to $10-$12 a share from $12-$14. The Santa
Clara, Calif.-based company raised $50 million by pricing its 5 million shares at $10 each.
Shares of Convergent Group Inc. (NasdaqNM:CVGP - news), a software and technical consultant company,
closed at their offering price of $7 per share, the bottom of an already trimmed price range.
Englewood, Colo.-based Convergent raised $35 million in the pricing by selling 5 million shares, reduced from
6 million. |
