Wireless chip designer Atheros Communications Inc made a storming stock market debut last week that is expected to encourage IT companies to press forward with IPOs that have been postponed due to difficult market conditions.
Atheros has impeccable credentials. Revenue is soaring, and it is shipping designs to a blue-chip customer base in the booming WLAN market. While initially it indicated that it was looking at a price per share in the $9.50 to $11.50 range, it quickly revised this to $11.50 to $13.50 before deciding that the strength of demand was such that it could ask for $14 a share.
This enabled it to raise $126m from the seven million shares on offer. Investors who took the plunge were swiftly rewarded. In its first day of trading, Atheros opened at $18.75 and ended the week 28.8% up on the offer price at $18.04.
Sunnyvale, California-based Atheros had been tipped as one of the hottest IPOs of 2004. It increased revenue from $1.8m in 2001 to $22.2m in 2002, and reached $49.7m in the first nine months of this year when it made a net loss of $12.9m.
With customers that include PC makers such as Hewlett-Packard, IBM, NEC, Sony and Toshiba, and networking equipment manufacturers such as D-Link, IO Data, Linksys, Microsoft, Netgear, Philips, and Proxim, Atheros has credibility that many young companies struggle for years to achieve.
Provided it can keep ahead of the game in an increasingly competitive market, there is little downside to Atheros, particularly as if it continues to grow, it will become increasingly attractive to the larger chipmakers who want to get into new markets.
This article is based on material originally published by ComputerWire