To: bill meehan who wrote (64497 ) 9/27/1999 4:40:00 PM From: Cynic 2005 Read Replies (1) | Respond to
Bill, something to ponder:Alteon WebSystems (ATON) 103 11/16 +28 3/4: ATON priced its IPO at $19 on Thursday night, opened Friday at $44 7/8, and has been flying ever since. Alteon builds switches that improve website performance for large scale enterprises. The market has been rewarding equipment companies that are beneficiaries of Internet growth with huge valuations lately, including JNPR, BRCD, and RBAK. Though some of these valuations might appear extreme given the still-low level of revenues for these companies, they are being justified by some transactions in the sector. First, there was the stunning Cisco (CSCO) purchase of start-up Cerent Corp for more than $6 bln. That purchase helped to justify the seemingly insane valuations of JNPR and RBAK. Today, we saw a similar move help to justify the market's valuation of Alteon. The Wall Street Journal reported that Microsoft (MSFT) invested $15 mln in Akamai Technologies for roughly a 1% stake; valuing Akamai at $1.5 bln. Akamai's business is similar to ATON, F5 Networks (FFIV), and Sandpiper Networks (privately held). The Microsoft investment in Akamai therefore offers investors a reality check on the ATON valuation. Note that Akamai's revenues for the first six months of 1999 totalled just $404,000. Alteon's sales for the same period were $14.6 mln. It is therefore not surprising to see ATON get a boost today from the Akamai news, just as many recent tech IPOs were lifted by news of the Cisco purchase of Cerent. - GJ
