Tut Systems IPO Buoyed By Home Networking Interest
By Reshma Kapadia
Wednesday January 27 1:05 PM ET
NEW YORK (Reuters) - In a sign of strong demand, the expected price range on the initial public offering from Tut Systems Inc. was raised Wednesday to $16-18 a share from an originally planned $14-16, according to lead underwriter Lehman Brothers.
Interest in Tut Systems' IPO has been running high: the company has one foot in the broadband, high-speed data arena and the other in the home networking world.
Tut, a developer of high-speed data connections using copper wire or digital subscriber lines, will offer 2.5 million shares in an initial public offering. The IPO is expected Thursday.
''They are in a sweet spot of telecom,'' said Gail Bronson of the IPO Monitor. ''Digital subscriber line technology (DSL) is really hot. Corporations are beginning to understand the value of DSL.
''If you were going to make a bet on one of the players (in this field), this would be it. They have all their ducks in a row in terms of partnerships and addressing market segments.''
DSL service provides near-instantaneous Internet access over standard copper phone lines.
Although the telecom arena is fairly crowded, Tut approaches the market in a slightly different way by focusing on multi-dwelling units as opposed to individual houses, analysts said.
The Pleasant Hill, Calif.-based company has also drawn interest because it is well-poised to benefit from forecast growth in the home networking market, analysts said.
Home networking involves setting up links between PCs within a single home. The sector is small, but expected to undergo wildfire growth in the next few years. Yankee Group projects that there will be about 5 million new home networks by 2002.
Institutional IPO investors will likely be interested in Tut's alliances with heavyweights such as Intel Corp. (Nasdaq:INTC - news) and Microsoft Corp. (Nasdaq:MSFT - news) on home-networking products.
Both Compaq Computer Corp. . and Diamond Multimedia Systems Inc. (Nasdaq:DIMD - news) have launched products with Tut's Home Run technology.
Home Run is Tut's popular technology that links home PCs.
''From a home networking perspective, their Home Run technology is the first standard for home phone networking alliance, and there are big companies supporting that alliance so their technology is going to have the names of a lot of big companies behind them,'' said Karuna Uppal, an analyst at the Yankee Group.
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