Sync Research Share Price Doubles in IPO
The stock value of Sync Research Inc. more than doubled Friday in its first day of public trading as Wall Street investors snatched up the computer networking company’s white-hot $78-million initial offering.
The stock, sold by the Irvine maker of hardware and software products at $20 a share, rose to $48.875 a share in Nasdaq trading before settling back slightly at $44.
The 941,750 shares that founder John H. Rademaker hung on to were worth $41.4 million at the close of the day. He also sold 65,000 shares in the offering, for $1.3 million. Though only 3.9 million Sync shares were included in the offering, almost half by existing shareholders, many investors took their profits quickly, selling their stock the same day and raising the total number of shares traded to nearly 4.6 million.
“Sync is at [the] right place at [the] right time with the right technology,” said Joe Noel, an analyst at the Hambrecht & Quist brokerage in San Francisco. “It operates in a niche within the telecommunications industry, and that sub-sector is white-hot. There’s tremendous investor interest in a stock like this.”
Sync Research, founded in 1981, has developed products that help a network of computers communicate faster over telephone lines with older mainframe computers built by International Business Machines Corp.
Sync estimates that 50,000 networks are connected with IBM mainframes worldwide and that they accounted for 60% of the world’s data networking expenditures in 1994.
The huge response to Sync’s stock is the latest in a series of high-technology shares that have been runaway hits on Wall Street. Analysts compared Sync’s opening day to that of Netscape Communications Corp., one of the most successful initial public offerings ever.
Netscape went public three months ago at $28 a share, well beyond an expected price of $12 to $14 a share, and reached a high of $75 before closing its first day of trading at $58.25.