``It's hot, hot, very hot,'' said Richard Begun, manager of the Orbitex Growth Fund. ``Corvis is involved in the optical networking area. Demand is very high for these products.''
Investors bought Avici and Corvis as they sold shares of rival networking and fiber-optic equipment companies. Among optical-gear makers, Ciena fell 16 3/16 to 134 7/16. Sycamore Networks Inc. fell 11 to 115. ONI Systems Inc. fell 14 7/8 to 89 3/8. Avici rival Juniper Networks Inc. fell 9 13/16 to 134 1/2. Cisco Systems Inc. fell 5 3/16 to 62 13/16.
(..............but for how long?
Is the internet and e commerce contracting?...Me thinks not.)
Technology News
Fri, 28 Jul 2000, 11:47pm EDT
Corvis Shares More Than Double After Record IPO; Avici More Than Triples
By Emma Moody
New York, July 28 (Bloomberg) -- Corvis Corp. shares more than doubled after the maker of equipment for fiber-optic networks raised $1.14 billion in an initial public offering, a record for a startup company that has yet to show any revenue.
Corvis surged 48 23/32 to 84 23/32. At a high of 98, the company had a market value of $32.2 billion -- also a record for a technology startup, according to the company's banker, Credit Suisse First Boston.
Columbia, Maryland-based Corvis last night sold 31.6 million shares at $36 each, raising almost three times as much as it was planning just three days ago. The company has agreements to sell a total of $550 million of its products to three network operators who are Corvis investors, pending successful tests.
``It's hot, hot, very hot,'' said Richard Begun, manager of the Orbitex Growth Fund. ``Corvis is involved in the optical networking area. Demand is very high for these products.''
Demand for fiber-optic equipment and parts is surging as use of the Internet grows, boosting the fortunes of companies such as Corvis and Avici Systems Inc., a maker of high-capacity data- traffic routers which also went public today.
Avici shares more than tripled, rising 65 3/4 to 96 3/4. The North Billerica, Massachusetts-based company raised $217 million in its IPO after twice boosting the sale to meet robust demand.
Avici sold 7 million shares at $31 apiece, above the $28 to $30 price range set on Monday by its bank, Morgan Stanley Dean Witter & Co. The price was above the original range of $18 to $20 set in June.
10 IPOs
Corvis' IPO was the biggest of 10 sales last night, the most companies in a single day since October last year, according to CommScan. First-day gains for many may be constrained by sliding technology stocks. The Nasdaq Composite index fell 4.6 percent today, extending its slide for the week to more than 10 percent.
It hasn't hurt optical-networking companies, which are tapping growing use of the Internet and the fiber-optic networks used to transmit the data.
``The future for Corvis looks pretty good,'' said Steve Catricks, analyst with Blackrock Inc.'s emerging growth team. ``It will probably become a top-tier optical networking company.''
Corvis's product can send optical signals up to 1,989 miles, compared with about 250 to 370 miles for equipment made by companies such as Ciena Corp. That lets network operators move calls and data across networks faster and more cheaply.
The company was started by David Huber, who also founded Ciena in 1992. Last week, Ciena sued Corvis, accusing it of infringing Ciena's technology patents.
Other Shares Fall
Investors bought Avici and Corvis as they sold shares of rival networking and fiber-optic equipment companies. Among optical-gear makers, Ciena fell 16 3/16 to 134 7/16. Sycamore Networks Inc. fell 11 to 115. ONI Systems Inc. fell 14 7/8 to 89 3/8. Avici rival Juniper Networks Inc. fell 9 13/16 to 134 1/2. Cisco Systems Inc. fell 5 3/16 to 62 13/16.
Corvis ``makes all my other technology stocks look cheap now,'' said Glen Frey, manager of the $400 million Orbitex Info- Tech & Communications Fund. He bought shares of Corvis and Avici in their offerings.
``What they have and how it's going to work is still a big question,'' Frey said of Corvis. ``What you're buying there is more the people and their experience.''
Corvis, founded three years ago, has a pair of agreements each worth $200 million to sell equipment to Williams Communications Group Inc. and Broadwing Inc. The sales depend on successful testing of Corvis's products. Corvis said it successfully completed tests with Broadwing. Williams and Broadwing both own stakes in Corvis.
Avici a `Hold'
Some weren't as enthusiastic about Avici. Brean Murray Securities analyst Gina Sockolow began coverage of Avici with a ``hold'' rating. She said the company has been ``aggressively booking revenue on test equipment'' and won't have finished key software for its routers until year's end.
``We are not comfortable with the quality of the revenue or the visibility,'' said Sockolow.
Avici, founded in 1996, has agreements to sell $45 million of its equipment to network operators Williams and Enron Corp., who are also investors in Avici. Avici plans to issue a warrant to AT&T Corp., which is testing Avici's router, to buy 100,000 shares at the IPO price over five years.
Qwest Communications International Inc., which holds a warrant to buy Corvis shares, also agreed to buy $150 million of Corvis gear.
``Given Corvis's conservative revenue recognition, we think there's a lot of revenue upside here,'' said Sockolow, who has a ``buy'' rating on Corvis shares.
Without generating revenue, Corvis lost $26.8 million in the three months ended April 1 and $71.3 million in the year through Jan. 1
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