What's the difference between last year's IPO market and this year's?

Revenues, apparently.

Barring a disappointing performance in the aftermarket trading of the Riverstone Networks IPO, or another meltdown in the Nasdaq, Unisphere Networks Inc. (Nasdaq: UNSP) looks set to become the next networking company to go public. Sources say it is tuning up for a debut next month.

Like Riverstone, Unisphere doesn't fit the usual startup mold. It was formed when German ûber telecom outfit Siemens AG (Frankfurt: SIE) wrapped up three acquisitions it had made -- Argon Networks, Castle Networks, and Redstone Communications -- into the Unisphere subsidiary. Former Redstone founder Jim Dolce ultimately became the CEO of the newly formed company (see Jim Dolce).

Unisphere filed a revised S-1 statement with the Securities and Exchange Commission last week. A closer examination of that document reveals that Unisphere meets many of the criteria demanded by a market in search of fundamentals. For one, it has multiple product lines.

These include the voice-over-IP switch that came from Castle. It also has the edge router it got in the Redstone acquisition. That's key, because edge routing is one of the biggest heat-generating trends in networking this year, with a slew of newly created startups like Laurel Networks and Quarry Technologies Inc. charging hard to develop products and announce their first customer wins. (What sets Unisphere apart from these companies is that it already has both.)

Unisphere also is developing two software applications that could ultimately pay big dividends. Its SSC (Service Selection Center) management software, when combined with its Commpilot portal code, allows it to play against outfits like Ellacoya Networks Inc. in what could be an ultra-lucrative market for IP service provisioning and creation solutions.

There may be more product on the way. In a surprising revelation, Thomas M. Burkardt, Unisphere's executive vice president and chief operating officer, told Light Reading recently that the company will announce a product based on its Argon acquisition "soon."

"There is a team working in this [core routing] area within Unisphere. And a huge team working on IP code in general," he added.

One of the ironies of Unisphere's story is that it has yet to tap into or exploit the marketing potential of its existing products. But that hasn't prevented it from doing something more important: using them to generate revenue. The company reported $30 million in revenue for the quarter ending Dec. 31, 2000, according to the most recent filing. That's up from $7.5 million in revenue reported in the comparable quarter of 1999. And it's 60 percent as much as the $50 million Unisphere reported for the entire fiscal year ending Sept. 31, 2000.

Depite such success, it's also clear that the markets have forced Unisphere to reduce expectations for the IPO. In the amended filing, the company reduced the price range of the 8.5 million shares to $15-$17 from the range of $20-$22 it had announced in a December filing. Credit Suisse First Boston will be leading the offering.

-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com