VoIP Systems

Veraz IPO Comes in Low

Investors aren't as hungry for new VOIP vendor stock as Veraz Networks Inc. (Nasdaq: VRAZ) had hoped, the softswitch vendor revealed late Wednesday. (See Veraz Prices IPO.)

When it first filed for a listing on Nasdaq back in October 2006, Veraz was hoping to raise as much as $115 million from the public markets. Now, though, it says it will sell 9 million shares (about 22.5 percent of its total stock) at $8 dollars each to raise $72 million, with a further 1.35 million shares available for any over-allotments, which would raise a further $12.15 million. (See Veraz Files for $115M IPO.)

In March, Veraz filed a form with the Securities and Exchange Commission (SEC) that said the initial price of the stock "is expected to be between $10.00 and $12.00 per share."

That slide in valuation spells bad news for ECI Telecom Ltd. , which owns about 40 percent of Veraz. On March 20, ECI said it expected to pocket $55 million to $70 million from the IPO. (See Veraz May Boost ECI.)

Now, though, ECI says that, at $8 per share, it expects to bag just $35 million to $48 million from its share of the initial listing. Despite that shortfall, ECI's share price dipped only 3 cents, less than half a percent, to $8.38 this morning.

After today's IPO, ECI will still hold a 27.5 percent stake in Veraz.

Veraz's latest filing shows that in 2006 the company reported revenues of $99.6 million, up from $76.2 million in 2005. Last year was also the first in which Veraz generated more revenues from its VOIP gear than its legacy digital circuit multiplication equipment (DCME): VOIP sales hit $47.3 million, up from $24.5 million a year earlier, while DCME revenues dipped to $38.6 million from $41.7 million in 2005.

Veraz still lost money in 2006, though. The net loss was $13.9 million, slightly better than 2005's $14.3 million deficit.

The most recent other VOIP equipment IPO was that of session border controller vendor Acme Packet Inc. (Nasdaq: APKT), which listed its shares in October 2006. It sold its stock at $9.50, well above its initial target range, and the shares jumped to $15 on the first day's trading. Acme's share price is currently $14.53.

— Ray Le Maistre, International News Editor, Light Reading

digits 12/5/2012 | 3:10:37 PM
re: Veraz IPO Comes in Low So the stock debuted at $8, lower than the initial range Verz was looking for. Now, after just a few days of trading, the share price is $6.46.
Wonder if that's going to deter any other VOIP vendor IPOs?

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