Riverstone Sets IPO Pricing Date
Riverstone, which is one of three companies spun out of Cabletron Systems Inc. (Nasdaq: CS) last summer, makes routers and switches for the metropolitan area network (see Cabletron Floats Riverstone ). This is the first communications equipment company to go public this year and only the second IPO that Morgan Stanley has led in 2001.
Many people in the industry are looking to Riverstone to test the IPO waters, which have been rather chilly over the last several months. Specifically, investors will be looking closely at the company’s reception in the wake of disappointing earnings announcements from some of its key competitors like Cisco Systems Inc. (Nasdaq: CSCO), Extreme Networks Inc. (Nasdaq: EXTR), and Foundry Networks Inc. (Nasdaq: FDRY)(see Cisco Misscos!).
It’s difficult to think that Riverstone won't be affected by a reduction in service provider spending, as well. In fact, some of its top ten customers listed in the amended S-1 filed with the Securities and Exchange Commission on January 29 have already fallen on hard times.
Vitts Networks, a data CLEC (competitive local exchange carrier) based in New Hampshire, which accounted for 11 percent of Riverstone’s sales from December 1, 1999, to December 2, 2000, filed for bankruptcy earlier this week. And British Telecom (BT) (NYSE: BTY), the company’s marquee customer, which brought in 15 percent of revenues last fiscal year, reported a 71 percent drop in third-quarter profits, news that could hurt Riverstone in the coming quarters if the carrier reduces spending to compensate for its loss.
-- Marguerite Reardon, senior editor, Light Reading http://www.lightreading.com