Starent Sets IPO Range
The company announced its IPO plans back in March and has just updated its Securities and Exchange Commission (SEC) filing to include further details. (See Starent Aims for $115M IPO.)
Starent will offer 9 million shares, while existing stockholders, including company CEO Ashraf Dahod, will sell an additional 1,534,841 shares. On top of that, a further 1,580,226 shares might be bought by the underwriters -- Goldman Sachs & Co. , JPMorgan Partners , Lehman Brothers , and Thomas Weisel Partners -- if there is enough investor demand.
Including the over-allotment, that's a potential 12.115 million Starent shares up for grabs. At $9, those shares would generate $109 million, while at $11 more than $133 million would be raised.
No date has been set for the IPO.
Market conditions look favorable for Starent at present. Its ST16 core wireless router helps carriers manage wireless data traffic, and that traffic is growing as more and more 3G networks become operational.
Increasing demand is evident in the first-quarter numbers Starent has included in its updated filing. The vendor generated revenues of $27.6 million and net income of $2.3 million in the three months ended March 31. In the same period a year ago, Starent reported revenues of $14.4 million and a profit of $252,000.
The company still has a strong reliance on a small number of customers, however. In the first quarter of 2007, Verizon Wireless accounted for about 60 percent of Starent's revenues, while partner Samsung Electronics Co. Ltd. (Korea: SEC) represented about 20 percent.
Starent says it's still in negotiations with Nortel Networks Ltd. , formerly an OEM partner, about new reseller relationships. Starent recently terminated its two agreements with Nortel, one for the CDMA market and one for UMTS, to concentrate more on direct sales, but is still exploring ways of working with the Canadian giant.
Nortel is currently developing a new wireless data core platform of its own, targeted at 4G wireless developments, but hopes to continue reselling Starent products during its R&D phase. (See Nortel Mothballs Shasta.)
Starent also has a new platform of its own, the ST40, which will be commercially available in the third quarter of this year. The vendor says it expects to start recording revenues from the new platform as early as the fourth quarter, noting in its filing that "a significant portion of our anticipated revenues in the fourth quarter of 2007 and beyond are expected to be generated from sales of the ST40. Our future sales and operating results will depend, to a significant extent, on the successful introduction and marketing of the ST40," something that will likely require additional marketing sales expenses.
The ST40 is an IP Multimedia Subsystem (IMS)-ready platform designed to handle video, VOIP, photos, gaming, and general Internet traffic. The vendor claims the platform "is readily upgradeable to respond to evolving 4G radio networks."
— Ray Le Maistre, International News Editor, Light Reading