Riverstone Networks is scheduled to start the clock ticking on its IPO today by launching the investor roadshow that typically precedes final pricing of shares by a few weeks.

Riverstone will offer 11.5 million shares, according to a revised S-1 filing to the Securities and Exchange Commission dated Jan 29. A price range of $11 to $13 has been set, making the offering worth a maximum of $149.5 million. That's 25 percent less than the $200 million cited in the original S-1 filed last September (see Cabletron Floats Riverstone ).

The roadshow begins in Europe today (Friday) and will continue in the U.S. next week. Morgan Stanley Dean Witter, which is leading the bank syndicate backing the IPO, is likely to set the final price before the end of February -- making Riverstone the first communications technology company to go public this year.

Riverstone, which was spun out of Cabletron Systems Inc. (Nasdaq: CS) back in June 2000, develops switch/routers for the metropolitan area network.

Sources close to the company say that it will focus on conveying two main messages during its dog and pony show. The first is that Riverstone is a revenue generating company with more than 150 current customers, raking in nearly $27 million in revenue in the third quarter, according to Cabletron’s last quarterly report. The company has managed to win a wide range of service provider customers including established players like WorldCom Inc. (Nasdaq: WCOM) and British Telecom (BT) (NYSE: BTY), as well as newer players like Telseon and IntelliSpace.

This is different from other companies that went public this past summer. For example, Corvis Corp. (Nasdaq: CORV) and Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) had no revenue when they filed for their IPOs. And investors are still awaiting news on legitimate customer wins. In Corvis’s case the only announced customers so far have also been investors (see Customer Questions Dog Corvis).

Avici isn’t much better. The company has barely managed to get its big toe in the door with many carriers, as Juniper Networks Inc. (Nasdaq: JNPR) and Cisco Systems Inc. (Nasdaq: CSCO) still own 98 percent of the core router market (see Cisco and Juniper: It's War).

The second message that Riverstone wants to get across to potential investors is that it's 100 percent focused on service providers in metro networks. It isn't targeting enterprise customers, which sets it apart from its main competitors -- Extreme Networks Inc. (Nasdaq: EXTR), Foundry Networks Inc. (Nasdaq: FDRY), and Cisco.

But Riverstone’s focus on this market could prove to be a double-edged sword. Extreme, Foundry, and Cisco have all warned that a slowdown in carrier spending has impacted their guidance for the future. And judging from the fall of their stock prices over the last two months, it looks as though Riverstone still has a tough story to sell.

Take Foundry as an example. The company’s stock sold for a high of $88 on November 7, 2000, and dropped to a low of $13 on December 20 after the company announced it would miss its quarterly projections (see Foundry Slammed After Warning). The stock has gained some ground, closing at $22.25 today, but it is still far from its high flying days. Extreme’s fall from glory hasn’t been quite as dramatic but still isn’t pretty. The company was selling for roughly $88 a share on December 11 and was selling for about $44 a share yesterday (see Stock Watch: Extreme Networks). Cisco has also suffered in the current climate. Its stock was at $54 on December 8 and closed yesterday at $38 a share.

Still, Riverstone has been working hard to pump up its public debut with new product announcements, introducing the RS 32000 in September and the RS 38000 just last month (see Riverstone Scores a Coup).

“They feel that the momentum in their business is strong enough and that if the market stabilizes, their story is compelling enough even in a market like this," says one source who didn’t want to be named. “We'll have to wait and see."

-- Marguerite Reardon, senior editor, Light Reading http://www.lightreading.com