BigBand IPO: Boing!
Alan Breznick, Cable/Video Practice Leader, Light Reading
BigBand Networks Inc. (Nasdaq: BBND) priced its IPO higher than its forecast range last night, despite the rocky stock market of the past two weeks.
In its Wall Street debut, BigBand offered 10.7 million shares at $13 per share, about 18 percent above the estimated $10 to $12 range of its most recently revised prospectus late last month. At the new price, the firm, working with lead underwriters Morgan Stanley and Merrill Lynch & Co. Inc. , is aiming to raise $139 million.
BigBand, which started trading on Nasdaq under the symbol "BBND" this morning, is offering 7.5 million of its own shares and 3.2 million shares by company insiders. The underwriters can buy another 1.6 million shares to cover overallotments if the demand is high enough.
At 2:30 p.m. ET, BigBand shares were up $3.66 (28.15%) to $16.66.
Now anticipating net proceeds of $88.3 million from the offering, BigBand intends to use the proceeds to pay off about $14.0 million in debt. In addition, the firm plans to use the proceeds for working capital, capital expenditures, and other general corporate purposes.
BigBand says it "may also use a portion of our net proceeds to fund acquisitions of complementary businesses, products, or technologies." But the cable and telco equipment supplier says it has no deals on the table right now.
Like BigBand's two previous S-1 filings, the new prospectus doesn't reveal much more about the company's future plans. Nor does it provide much more information about the firm's growing business, which turned profitable on $176.6 million in revenues for the first time last year. (See BigBand Provides IPO Update.)
Due to the stock market's two big one-day plunges of the past two weeks, several companies pulled back from their planned IPOs this week. But BigBand went forward as intended, thanks to apparently strong investor interest in its digital video, voice, and data products, and its growth prospects.
In a column earlier this week, Renaissance Capital featured the BigBand offering as its IPO of the week. The investment research firm argued that BigBand "has all the key ingredients of a hot technology IPO" despite the recent market jitters and mixed results for last week's new offerings.
The Renaissance Capital column also contended that BigBand's proposed share price seems relatively cheap, compared to other tech players, like Ericsson, but the firm expressed concern about the relatively high volume of stock sales by company executives and board members.
— Alan Breznick, Site Editor, Cable Digital News