& cplSiteName &

A10 IPO Sputters Off the Ground

Mitch Wagner
3/21/2014
50%
50%

The application delivery controller peddler A10 Networks had a tepid start to its first day of trading as a public company Friday.

As of 2:05 p.m. ET, the stock price was $15.55, up about 3.7% from the IPO price of $15. A10 initially traded below its IPO price, starting at $13.75. A10 Networks Inc. sold 12.5 million shares in its IPO, raising $187.50 million.

How does Lee Chen, founder and CEO, feel about the pricing? "I'm more the long-term value investor, so I don't pay attention to one day trading up or down," Chen told us, dodging the question diplomatically.

A10 Networks founder and CEO Lee Chen rings the opening bell on the New York Stock Exchange. Given the stock's tepid performance on the first day of trading, he should have just tapped the bell gently.
A10 Networks founder and CEO Lee Chen rings the opening bell on the New York Stock Exchange. Given the stock's tepid performance on the first day of trading, he should have just tapped the bell gently.

Other business software stocks with recent IPOs performed a lot better, The Wall Street Journal reports (subscription required). For example, the retail e-commerce software maker Borderfree Inc., which also started trading Friday, had gained 23% by midday, passing its IPO price of $16 to trade at about $19.50. The health plan software provider Castlight Health had gained 149%.

Financial journalists and Wall Street watchers look for rocket rides on the first day of an IPO, but spectacular first-day gains funnel most of their rewards to IPO underwriters and first-day speculators. Modest IPO gains reward the people who actually helped build a newly public company: venture capitalists, employees, and other early investors.

So what about that long-term value? A10 reported that its revenue rose 18% last year to $141.7 million last year after rising 32% the previous year.

Revenue growth over the last four years has been 37% annually, Chen said. The company has made a business decision to invest in long-term growth, and it has a three- to five-year model to achieve profitability.

A-10 is "playing at the center of four megatrends," Chen said: big data, mobility, security, and cloud computing. Its appliances provide load balancing, application delivery, quality of service, password management, and more. A10 launched a DDOS protection product in January. (See A10 Enters DDOS Protection Market.)

From 2010 through 2013, A10 was weighed down by an intellectual property lawsuit filed against the company by Brocade Communications Systems Inc. (Nasdaq: BRCD). That suit was settled in May 2013. A10 says it hurt it through the direct costs of fighting the litigation and by reducing demand for A10 products due to marketplace uncertainty. Now that the suit has been settled, A10 expects demand to pick up briskly. (See Brocade & A10 Settle.)

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to mwagner@lightreading.com.

Related posts:


Want to learn more about SDN and the transport network? Check out the agenda for Light Reading's Big Telecom Event (BTE), which will take place June 17-18 at the Sheraton Chicago Hotel and Towers. The event combines the educational power of interactive conference sessions devised and hosted by Heavy Reading's experienced industry analysts with multi-vendor interoperability and proof-of-concept networking and application showcases. For more on the event, the topics, and the stellar service provider speaker lineup, see Telecommunication Luminaries to Discuss the Hottest Industry Trends at Light Reading's Big Telecom Event in June.


(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
3/23/2014 | 3:55:38 PM
Re: Congrats
I think that the comment from the CEO isn't diplomatic. The purpose of the leader of the company is to build that long term value.

These guys have to think ahead, often further out than the time that they will hold the postion in order to best prepare a company for the future. 
DOShea
50%
50%
DOShea,
User Rank: Blogger
3/21/2014 | 9:20:56 PM
The market
The ADC market is really interesting right now with a lot of companies jockeying for bigger shares with Cisco backing out. Long-term, how they use this money and higher profile to gain some advantage in that market will be very telling.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
3/21/2014 | 5:46:52 PM
Re: Congrats
That's the way I read it too -- early investors get paid back, with a little something for people who bought the IPO stock. A good day. But I'm no expert. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
3/21/2014 | 5:20:52 PM
Closing price
Closing price: $16.21. I'll declare anything above the IPO price to be a victory, and call it a weekend. But I'm no IPO expert -- what do you think?
schlettie
50%
50%
schlettie,
User Rank: Lightning
3/21/2014 | 5:15:53 PM
Congrats
A10's bankers priced the shares fairly for their investors and didn't low-ball them to benefit the bankers' cronies.
Featured Video
From The Founder
The 'gleaming city on a hill,' Steve Saunders calls it. But who is going to take us from today's NFV componentry to the grand future of a self-driving network? Here's a look at the vendors hoping to make it happen.
Flash Poll
Upcoming Live Events
September 28, 2017, Denver, CO
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 2, 2017, 8 Northumberland Avenue – London
November 10, 2017, The Westin Times Square, New York, NY
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Could 5G Have Found Its Glass Ceiling?
Dan Jones, Mobile Editor, 9/20/2017
1 Million Pirate Set-Top Boxes Sold in the UK
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 9/20/2017
Comcast Shuts Down OTT Again
Mari Silbey, Senior Editor, Cable/Video, 9/19/2017
Photo Highlights: Operations Transformation Forum 2017
Ray Le Maistre, International Group Editor, 9/17/2017
WiCipedia: Endangered Species, 'the Pao Effect' & Bad Actors
Eryn Leavens, Special Features & Copy Editor, 9/22/2017
Animals with Phones
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed