STM Realizes $15 Million in 1st Stock Issue : Technology: The Costa Mesa firm uses satellite links to create corporate communications ties. Proceeds will be spent for overseas marketing and R&D;.
Satellite Technology Management Inc., a company that uses satellite transmission links to create corporate communications networks, raised $15 million Wednesday in its initial public offering.
STM issued 1.6 million shares at $10 per share in its first day of trading. With resales, the volume reached 1.8 million shares, ranking it as the seventh-most-active stock Wednesday in over-the-counter trading. The stock closed at $10.125 a share.
“It’s very exciting,” said Stephen A. Strohman, executive vice president of the Costa Mesa company, which has 70 employees. “The market has been very good for public offerings this year, and our profits have doubled each year for the past three years.”
Proceeds from the offering will be spent for marketing and for research and development overseas. About $1.3 million will go to underwriters led by H.J. Meyers & Co. Inc., an investment banking firm in Beverly Hills.
Competing against large satellite technology companies--such as GTE SpaceNet and Hughes Aircraft Co.--STM assembles networks to handle voice and computer data communications for small-to-medium-size companies.
STM leases transmission time on orbiting communications satellites and manufactures equipment that uses the satellites to send messages or make phone calls from one remote location to another.
The networks are especially useful for developing countries that do not have an infrastructure of telephone cables already installed. For instance, STM’s biggest customer so far is the Philippine Long Distance Telephone Co., which in January ordered a $6-million network to establish communications for its thousands of island communities.
“The more remote the locations, the better the economics work in favor of satellite communications,” Strohman said. “It’s a quick and easy way for a country to jump into today’s technology.”
Because of growing international demand for communications networks in developing countries and the globalization of businesses, STM’s revenues grew 45% in 1991, Strohman said, to $12.4 million from $8.5 million in 1990.
About 88% of revenues come from overseas accounts, which are serviced by a network of independent distributors, Strohman said.
Michael Murphy, technology analyst and editor of the California Technology Stock Letter in Half Moon Bay in San Mateo County, estimated that STM will reach $18 million in revenues during 1992, based on its international growth and the lack of other players who focus exclusively on satellite communications networks.
The stock market has been particularly kind to public offerings this year. Last week, Triconex Corp., an Irvine maker of safety control systems, saw its stock price soar 25% in its first day of trading, to $16.25 a share. Triconex stock closed Wednesday at $17.75 a share, down 50 cents, in over-the-counter trading.
“I thought (STM) had potential to be similar to Triconex” in price escalation, said Steve DeLuca, analyst at Cruttenden & Co., an investment banking firm at Irvine.
From Jan. 1 to March 16, about 120 companies nationally went public, raising $7.4 billion, according to IDD Information Services in New York. By comparison, 22 companies went public, raising $1.8 billion, in the same period a year earlier.
Strohman said the company has no debt. Among its plans is to create a cost-effective video conference system that could use the satellite network.
Such a system is becoming more practical as researchers learn through so-called compression technology to squeeze more data through the communications system at faster speeds, he said.
