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Technology Stocks : SONS -- Ignore unavailable to you. Want to Upgrade?

To: MadManMike who wrote (2)	5/25/2000 12:29:00 AM
From: Techplayer	Read Replies (1) \| Respond to of 1575

Qwark, My understanding (prior to this superficial article) is that it was IPO or bust...tp Avici looks to be the same... boston.com Sonus facing rough seas for IPO launch Strong offering may be in peril in roiling market By Steven Syre and Charles Stein, Globe Staff, 5/24/2000 t's one of the toughest calls on Wall Street: choosing whether to launch an initial public offering in a queasy stock market, or pull back and wait. While the Nasdaq Composite index was slumping toward a six-month low yesterday, Sonus Networks Inc. of Westford was making its road-show IPO pitch to a function room crowded with potential institutional investors at the Boston Harbor Hotel. At the moment, the Sonus offering is scheduled to be priced by underwriter Goldman, Sachs & Co. tomorrow. Will it really happen then? Sonus has a lot going for it and surely would have been an IPO winner in the final months of 1999 or very early this year. Right now, even the best deals are a day-to-day proposition, though. Sonus is working in a growing field, selling gear for ''converged'' old-style circuit-switching and modern packet-switching communications networks. It has a well-regarded management team that includes serial entrepreneur Rubin Gruber, who has helped found VideoServer Inc., Cambridge Telecommunications Inc., and Davox Corp., and Cascade Communications veteran Hassan Ahmed. Sonus also has a blue-chip roster of venture capital backers and a handful of big customers, including one that has already signed on for a contract worth up to $100 million. ''They have a pretty solid product and a solid pipeline of customers,'' said John Golden, a technology analyst at John Hancock Mutual Funds. What it doesn't have is much of a history actually selling things to customers. Revenues of $1.1 million in the first quarter of this year were the first at Sonus. The company has burned through $37 million since the start of 1998. Sonus also faces big competitors with deep pockets, like Lucent Technologies and Nortel Networks. Cisco Systems and others also pose a threat. ''The risk on this is that Nortel and Lucent are competitors,'' said Golden. ''Although Sonus might have a technology lead in the short term, the question is can they maintain it?'' Meanwhile, the mood among technology investors is decidedly gloomy. While Sonus was making its case downtown, BankAmerica Securities was hosting an Internet software conference at the Copley Plaza amid dampened enthusiasm yesterday. ''Judging by everyone's mood, we're all grumpy,'' said one institutional investor who was there. But networking companies seemed to be one of the few sparks in the IPO market over the last few weeks. New Focus Inc. shares soared 155 percent in their first day of trading last week, and hope was raised for ONI Systems Corp., another optical networking company scheduled to go public this week. Whether Sonus would fit into the category of hot networking stocks is open to debate. David Menlow, president of IPOFinancial.com, finds all the networking sizzle in companies that are working with fiber-optic communications. That doesn't include Sonus. ''It's got a little bit of sex appeal, but pales in comparison,'' Menlow said. He predicted a marginal increase in Sonus shares once it begins trading. Others, like Golden, see investor enthusiasm for companies that would fit under a ''next-generation'' networking umbrella. But those issues are dwarfed by the larger tech stock market direction and all the worries that go along with it. Today's new idea will still draw an audience, but it is one hard sell. ''The window, while it's open, is just barely open,'' said David Smith of Loomis Sayles & Co. Envision, Part II Last week, we were trying to puzzle out how the public stock of Marblrough-based Envision Development Corp. could possibly be worth nearly $500 million. Now it may have a buyer. As usual, it's not a simple story. Envision announced yesterday that it was in talks about the possible acquisition of the company by Zero.net, a private San Francisco venture firm that already owns 41.5 percent of its stock. Zero.net acquired its Envision stock through Dominion Income Management and Alta Ltd., a Channel Islands entity. In the middle of Zero.net and both the sellers, you would find Andrew Evans. At one time, Evans helped manage personal money for Bill Gates. According to a 1993 Wall Street Journal profile, Evans got six months in prison after pleading guilty to federal charges related to bank fraud in 1985 and settled an unrelated US Securities and Exchange suit without admitting or denying insider trading charges the next year. Evans didn't return our phone call yesterday. If you missed our earlier installment, Envision went public under a different name last fall and has bought several private technology businesses since. But it has never publicly recorded revenue from anything other than selling perfume over the Internet, a part of the business it sold this month. Revenues in its most recent quarter nearly tripled, to $1.5 million, amid losses. Envision executives say their new technology strategy will become more apparent when they report their next quarter. Stay tuned.