The timing of WHEN IPO comes out will be dependent upon several factors : 1) how the roadshow with fund managers goes 2) overall market health and 3) SEC approval. For example the WEBT IPO was several weeks late ( S-1 filed in Dec, IPO did not happen until Feb 20/99 ) due to an SEC backlog caused by the huge volume of IPO's.
My take is that once they file the S-1, Brocade is technically in a "quiet period" and therefore minimizes the likelihood of any major Brocade press releases during this 30+ day filing period. If I were in Brocade's shoes, I would hope to IPO by last week of April so that I could get out press releases in time for N-1 Show in Vegas the first week of May.
I have glossed over the Brocade S-1 ( no time to review with fine tooth comb yet ) and have the following commentary/observations:
-there appear to be approx 24 million shares not including dilution of probably 2-3 million new shares offered in the IPO..Andy Bechtolsheim ( Sun co-founder and VP at CSCO ) owns 1.2 million shares, ie 5% of Brocade
-Brocade has had 4 rounds of financing ( preferred shares convertible to common ):
Series A ( Aug 28/95)- 1,425,000 shares at $1.00/share
Series B ( June 17/96) - 816,250 shares at $4.00/share
Series C ( Dec 6/96 ) - 3,333,333 shares at $3.00/share
Series D* ( Sept 29/97, Nov 17/97, Dec 3/97 )- 3,660,900 shares at $5.78/share
*Series D also got 134,600 warrants at $6.78 exercise price
My initial reaction is that with world class bankers like MSDW, BTAB and DRWA, despite a shaky looking S-1 ( compared to companies like BRCM )this IPO should be priced in the low-mid teens, probably somewhere between 2.5 - 3 million shares. NSM listing requires a stock price of at least $5, so mid-teens gives a margin of safety for volatility.
Therefore assuming IPO pricing of $15 and 3 million shares ( ballpark )we get 27 million shares outstanding = $405 million underwriters valuation. These guys know how to conduct a roadshow and sell the story ( the red herrings always look bad )to funds..When they get a small offering of only 3 million shares, between these 3 underwriters, they'll probably get orders/indications of interest from funds of at least 3 times the size of the offering. For example, the WEBT IPO recently underwritten by Tier 2 bankers Dain/Soundview generated fund orders from the roadshow of approx 15 million shares vs the 3.5 million offered. This resulted in the WEBT IPO opening up at $38 vs IPO price of $13. Most Dain retail clients were lucky to get 100 shares at IPO pricing. Assuming, the IPO market remains healthy, I would not be surprised to see Brocade garner a $700 million - $1 billion market cap at least initially.
I have more comments this weekend..I am elated to see the $24 million revenue number for 1998 and the fact that SQNT represented 72% of their 1998 revenues ( $18 million sales to SQNT in 1998 )..this is consistent with what I posted yesterday on Michael Burke thread..it also makes me more comfortable with the accuracy/reliability of G-2 that I and others have been getting.
Ps - it is absolutely hilarious to see Morgan Keegan on the outside looking in.. after all they did for Brocade, they get ZERO piece of the IPO action. ROFLMAO.
|
