McData getting warm reception
H Power prices above range as deals flow
By Steve Gelsi, CBS.MarketWatch.com
Last Update: 8:03 AM ET Aug 9, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - McData priced a big $2 above its range as the EMC spinoff led yet another busy day in the market for initial public offerings Wednesday.
Investors appear ready to gobble up shares of McData's $350 million IPO as the new issues market continues showing strength with several deals debuting.
On Tuesday, Active Power (ACPW: news, msgs) shot up 210 percent as the leader among seven IPOs, none of which fell below their offering price. See full story.
Besides McData, H Power (HPOW: news, msgs) looks strong as investors tap into the alternative energy category.
The Clifton, N.J. developer of fuel cell technology priced its 7 million shares at $16 each, a big $3 above its $11 to $13 price range. It's raising $112 million with lead underwriter Lehman Bros.
But all is not roses in the new issues market.
ChipPac (CHPC: news, msgs), the Santa Clara, Calif.-based provider of test and packaging services, priced its 10 million shares at $12 each, below its $13 to $15 range. The company decreased its price from $20 to $22 and trimmed its IPO from 15.5 million shares ahead of its debut.
McData
McData (MCDT: news, msgs) is a Broomfield, Colo.-based provider of enterprise switches and software for connecting Web servers and storage systems.
It's a unit of EMC (EMC: news, msgs), the No. 1 maker of mainframe computer disk memory hardware and software.
It priced its 12.5 million shares at $28 per share, above its already upped $24 to $26 price range. On Tuesday, McData increased its estimated price range from $19 to $21 in a sign of keen investor interest.
Credit Suisse First Boston is the lead manager and Merrill Lynch & Co. and Deutsche Banc Alex. Brown are co-managing underwriters on the deal.
EMC plans to spin out their shares of McData to their shareholders within 6 to 12 months. EMC bought the company in 1995 and restructured it into a wholly owned subsidiary in 1997.
Citing quiet periods required by the Securities and Exchange Commission, neither EMC nor McData officials would comment on the IPO on Wednesday, a McData spokeswoman said.
It rang up $5.3 million in profit on $47.1 million in revenue in the first quarter.
The company has drawn accolades from IPO watchers such as IPOfinancial.com and WorldFinanceNet.
"With McData, we are looking at a proven hi-tech performance group with storage area networks," IPOfinancial.com's David Menlow said in his Pick of the Week commentary. "The concept behind this group is really quite simple. As we continue to have access to more information and computer programs become more sophisticated, there is a very simple need for more storage of these files."
International Data Corp. estimates that multi-user disk storage grew from more than 7,000 terabytes in 1993 to more than 185,000 terabytes in 1999 and will reach more than 1.9 million terabytes in 2003. |
