Intel backs Network Elements
Chip giant, Nortel in $77 million round
By Steve Gelsi, CBS.MarketWatch.com
Last Update: 10:16 AM ET Jan 4, 2001
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NEW YORK (CBS.MW) - Network Elements drew support from Intel and Nortel Thursday in a $77 million round of financing as prospects for companies eyeing initial public offerings perked up on the heels of the Fed's interest rate cut.
Intel (INTC: news, msgs) , along with tech leaders such as Oracle (ORCL: news, msgs) , Microsoft (MSFT: news, msgs) , Motorola (MOT: news, msgs) and Dell (DELL: news, msgs) , often backs technology startups that go public.
The strategy paid off big during the bull market in initial public offerings in 1998, 1999 and early 2000, but has proven costly of late.
The chip giant took stakes in IPOs such as IBeam (IBEM: news, msgs) and EToys (ETYS: news, msgs) only to lose amid a severe downdraft in the Nasdaq last year.
But now the IPO market is receiving the first positive news in months with the Fed's rate cut. See full story.
Stocks added to their gains Thursday, as IPO watchers glowed.
"A rate cut certainly helps," said Kath Smithy of Renaissance Capital's IPO Plus Fund (IPOSX: news, msgs) , which jumped 10 percent amid Wednesday's rally.
"Certainly the IPO participants have been clinging even a whisper of anything that may be positive on a whole," said David Menlow of IPOFinancial.com. "To see the interest rate cut helps to quantify a bottom for the marketplace, at least for the near-term."
That's good news for any company that may be eyeing the public markets, including Beaverton, Ore.-based Network Elements.
So far the three-year-old maker of optical networking equipment has received $100 million in funding from Intel's Communications Fund, Nortel (NT: news, msgs) , CS First Boston, Western Technology and Alloy Ventures.
Network Elements CEO Bruce Murdock said the latest round will help the company build up its manufacturing capacity and introduce new products.
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