July 28, 2000
On a day when other high-technology stocks helped drag the Nasdaq Composite index down 4.7 percent, Avici Systems Inc. (Nasdaq: AVCI) and Corvis Corp. (Nasdaq: CORV) shone brightly in Wall Street introductions.
By 3:00 EST, Corvis shares had more than doubled in value to about $83 per share from their offering price of $36, following an initial public offering of 31.6 million shares. The share price also beat the company's July 25 estimates of $28 to $30, which had been revised upward (see Corvis IPO Terms Increased).
Avici's shares were selling at $94, having soared over 200 percent in value from the $31 IPO price, in which 7 million shares were offered. Avici, too, revised its share price range upward (see Avici IPO Heats Up). At the close of the market Friday, Corvis had a new market capitalization of $28 billon and Avici had a market capitalization of $4.5 billion.
The stunning debuts indicate that Corvis's optical switch and Avici's terabit router have captured confidence with telecom investors, despite the fact that neither company yet has significant amounts of customers, revenues, or shipping products (see Corvis, Avici Bide Their Time). It also shows that investors are willing to pay astronomical prices for long-haul optical technology such as that offered by Corvis, which attained a valuation five times as high as Avici's.
At any rate, Corvis and Avici shouldn't have trouble marketing and developing their products now, having raised over $1 billion and $200 million, respectively.
-- by Mary Jander, senior editor, Light Reading http://www.lightreading.com
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