Riverstone leads IPO week
cnnfn.cnn.com
Next week is highlighted by Riverstone Networks Inc., a company with no profits yet but plenty of investor and media interest.
Riverstone, an Internet infrastructure equipment maker, is the first of Cabletron Systems Inc.'s (CS: Research, Estimates) businesses to go public, led by Morgan Stanley Dean Witter.
In June, Cabletron unveiled plans to transform itself into a holding company and spin out its four units in IPOs -- Riverstone Networks, Aprisma Management Technologies, Enterasys Networks and GlobalNetwork Technology Services.
David Menlow, president of IPOFinancial.com, is not sure the deal will get the same first-day gain as KPMG (KCIN: Research, Estimates).
"The growth is there, but more so this a chance for investors to sink their teeth into the Cabletron wonder story," Menlow said.
But Riverstone's balance sheet makes DeGraw a little unsure. The Santa Clara, Calif.-based company had revenues of more than $23 million in 2000, but lost more than $37 million.
"They have a phenomenal growth rate, attractive outlook, and an extraordinary cash burn," DeGraw said. "They are a momentum play at a time when the market is very skeptical about momentum plays."
"There's a good deal of uncertainty about Riverstone," he said.
Riverstone makes equipment such as routers and switches, that direct optical and electrical data across the Internet.
The company targets services providers such as British Telecom (BTY: Research, Estimates), Earthlink (ELNK: Research, Estimates) and Telia. Riverstone Networks is a wholly owned subsidiary of Cabletron, which will have an 86 percent stake after the IPO. Rochester, N.H.-based Cabletron plans to distribute shares to Cabletron shareholders but has not detailed timing of the distribution.
Riverstone plans to raise $120 million, pricing 10 million shares between $11 and $13 per share. It will trade on the Nasdaq as "RSTN." |
