Foundry Network Shares Soar to 2nd-Largest IPO Debut
Foundry Networks Inc. stock was even better than gold, rocketing sixfold in first-day trading Tuesday--the second-best initial public offering debut ever.
Shares in the profitable Sunnyvale, Calif.-based company soared $131.25 to close at $156.25 on Nasdaq. The 525% gain gave the company a market value of $8.7 billion and co-founder Bobby Johnson a paper windfall of $1.9 billion.
“This shows the enthusiasm for Internet infrastructure plays,” said Steven Tuen, director of research at IPO Value Monitor in New York. “Foundry Networks has leading-edge technology. As we continue to build the Internet, products such as those offered by Foundry will be in great demand.”
Foundry makes switches and networking equipment used by Internet service providers.
The company, which earned $3.3 million, or 8 cents a share, in the six months ended June 30, is a rarity among Internet-related firms, most of which are unprofitable.
DB Alex. Brown managed the IPO for Foundry, whose shares trade under the symbol FDRY.
Among Tuesday’s other IPOs on Nasdaq, AirGate PCS Inc. (PCSA) surged $9.81 to $26.81; Medscape Inc. (MSCP) jumped $5.81 to $13.81; and FreeShop.com Inc. (FSHP) rose $1.56 to $13.56.
Those gains may look puny next to Foundry’s, but investors should note that many first-day wonders--including all-time leader The globe.com, which leaped 606%, and several recent IPOs--have sunk since.
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The 10 Hottest IPOs
Foundry Networks’ initial public offering Tuesday was the second-biggest one-day gainer in history, soaring 525%. A look at the 10 hottest IPOs, ranked by first-day market gains:
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IP0 IPO 1st-day 1st-day Tues. Stock (ticker) date price close gain close Theglobe.com (TGLO) 11/98 $4.50 $31.75 +606% $12.94 Foundry Ntwrks. (FDRY) Tues. 25.00 156.25 +525 156.25 MarketWatch.com (MKTW) 1/99 17.00 97.50 +474 47.81 AskJeeves (ASKJ) 6/99 14.00 64.94 +364 36.13 Priceline.com (PCLN) 3/99 16.00 69.00 +331 61.38 Healtheon (HLTH) 2/99 8.00 31.38 +292 36.25 Ariba (ARBA) 6/99 23.00 90.00 +291 167.75 EToys (ETYS) 5/99 20.00 76.56 +283 59.63 Red Hat (RHAT) 8/99 14.00 52.06 +272 99.63 Redback Ntwrks. (RBAK) 5/99 23.00 84.13 +266 121.50
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Source: Thomson Financial Securities Data
