Wholesale/transport services

Zayo Zooms Out of the IPO Gate

Wholesale network operator Zayo went public Friday at $19 per share, and saw its price jump more than 20% by late morning, suggesting that investors weren't scared off, at least initially, by Zayo's massive debt load and its admission that it could be several years away from showing a profit.

Zayo Group Inc. (NYSE: ZAYO) may have picked the right day for its IPO, seeing its value rise Friday during a broad market rally that comes after a wild up-and-down week on Wall Street. As of 11 a.m. Eastern Time, the NYSE Composite was up more than 140 points, while the Dow Jones index ballooned more than 228, and the NASDAQ was up about 54. At that hour, Zayo was at $22.05, an increase of about 16% from the IPO price, after rising more than 20% in the previous hour.

After a seven-year acquisition binge that turned the Boulder, Colo., company into an international fiber network giant, Zayo announced IPO plans in July. Its filing revealed that the company had spent almost $4 billion on acquisitions and still carried almost $3 billion in debt, while posting a quarterly loss of more than $43 million in its most recent earnings report. (See Zayo Files for IPO and How Zayo Spent $3.7B on Acquisitions.)

Need to know more about how network operators can scale and optimize their backhaul networks in a 4G/LTE world? Then check out the agenda for Backhaul Strategies For Mobile Operators, October 29, at the Westin Times Square, New York

Still, Zayo's identity as a debt-laden, acquisitive juggernaut might be just fine with investors who no doubt have their eyes set on the ongoing bandwidth explosion, and Zayo's potential to continue raking in revenue while living right at the center of it.

Zayo will be articulating its momentum and approach to the mobile backhaul market at Light Reading's Backhaul Strategies for Mobile Operators conference in New York City on October 29. Click here for more details.

— Dan O'Shea, Managing Editor, Light Reading

Ariella 10/20/2014 | 8:08:58 AM
Re: = IPO failure @Joe there is that, and these roller-coaster movements also keep the company name in the news. For those hwo believe there's no such thing as bad publicity, that has to be a plus. 
Joe Stanganelli 10/20/2014 | 12:55:05 AM
Re: = IPO failure True enough, Ariella.

Compare Facebook -- or, less infamously but much more drastically -- Vonage.  Significant decreases upon going public may make for unpleasant press/IR, but what they show from a practical perspective is that the company was able to raise more than it was actually worth -- which is good for growth.
Ariella 10/19/2014 | 10:34:22 AM
Re: = IPO failure While 20% is a health increase, I seem to recall much more dramatic IPO increases, as high as 100%. A few are mentioned here: nasdaq.com/article/us-ipo-pricing-recap-rewalk-runs-years-5th-ipo-to-top-100-in-first-day-trading-cm390446
Joe Stanganelli 10/19/2014 | 6:06:40 AM
= IPO failure Whenever I read news about a tech stock "zoom[ing]" up in value when it first opens for public trading, I don't think, "Oh, boy, it's doing well;" I think, "Oh, boy, that IPO failed."

Remember: The purpose of the IPO isn't to make stockholders rich; the purpose of the IPO is to raise as much money as possible for the company.

Sounds to me like, as with many tech stocks (*coughcoughLinkedIncoughcough*), this was a case of the finance guys who underwrote the IPO doing some favors for big investor clients by undervaluing it.
pdonegan67 10/17/2014 | 11:56:07 AM
Hear more from Zayo Zayo's Dave Jones, Senior Vice Precident, Wireless Infrastructure Implementation, will be speaking at Light Reading's "Backhaul Strategies" conference in New York on October 29th.
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