Optical/IP Networks

CoSine Soars On Debut

Following a pattern set in recent optical networking IPOs, CoSine Communications Inc. shares tripled early in its first day on Wall Street.

By market close, CoSine shares had risen in value from $23 to $63.06, following an initial public offering of 10 million shares.

CoSine's price had already been raised earlier this month, when underwriter Goldman Sachs & Co. (NYSE: GS) increased the offer price to $15-$17 from $13-$15 (see CoSine Ups IPO Price Range). At this point, CoSine's market capitalization is about $6.31 billion.

CoSine's debut comes later than expected. Initially set for spring, Cosine delayed its IPO five months (see Cosine IPO: Still On Hold). Analysts speculated the reason was twofold: First, the company wanted to wait for more favorable market conditions; and second, it was under scrutiny by the Securities and Exchange Commission because most of its customers own stock warrants.

While market conditions have shifted a bit (Nasdaq's index had dropped more than 50 points by market close today), CoSine's still in thrall to its customers. According to its latest SEC S-1/A filings, six of Cosine's eight customers hold stock or investments in the company.

As of June 30, 2000, CoSine had $11.3 million in revenue from sales to two customers, and its balance sheet showed $104.2 million in losses.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

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