Riverbed dredges up $86m in IPO
Investors rush to ride the latest bandwagon
Riverbed Technology has become the first storage company to go public in around two years - it's also one of the first WAN acceleration start-ups to go public.
Riverbed, whose Steelhead boxes act as local file caches and can also speed up WAN connections between offices, opened on Nasdaq yesterday at $9.75 per share. The price rose to $15.60 in later trading.
The IPO raised some $86m for the four-year-old company, which has been spending hard in recent quarters and lost $10m in the first six months of 2006, according to its IPO filing with the US SEC.
Rivals had accused Riverbed of spending too much on sales and marketing and not enough on R&D, but the company said it was strengthening its management to support its strong growth - it has grown at least 30 per cent in every quarter since introducing its first Steelheads in 2004.
In its prospectus, Riverbed said it would use the money raised to grow the company, develop new products, and possibly acquire other companies. It also said it has an accumulated deficit of $41.8m and expects to continue making losses - something which doesn't seem to have deterred investors, desperate to jump onto the latest techno bandwagon.
Several other WAN acceleration start-ups have already been bought up, as Orbital Data was recently by Citrix, but the success of the Riverbed IPO could bode well for those still in private hands, such as Availl, Certeon, Expand Networks, Signiant and Silver Peak Systems. ®