Loudcloud, the latest internet venture of Netscape co-founder Marc Andreessen, saw its stock barely edge up in its debut on the Nasdaq exchange.
Shares of the company rose a modest six per cent on Friday in its debut as an initial public offering (IPO). After pricing at $6 per share late on Thursday, in a $150m IPO that had already been reduced twice, Loudcloud rose as much as 31 cents to $6.31, valuing the company at about $463m. This is roughly a third of the $1.3bn it originally hoped for, according to a filing with securities regulators last October.
The early returns mark a disappointing IPO for a company that just last week said it would sell shares for $8 to $10.
Loudcloud has since cut that offering price and raised the number of shares from a planned 20 million to 25 million. The end result is $10m, $50m less for Loudcloud, a company that lost $175m on $6.6m in revenue for the nine months ended 31 October.
"It's desperation," said Dave Nadig, a portfolio manager with MetaMarkets.com. "I think they're pretty much standing on street corners trying to find people to buy. They need the $150m to build their business."
Andreessen, whose net worth is estimated at about $500m, is Loudcloud's second largest shareholder with 8.6 million shares, or 12.8 per cent stake. Benchmark Capital is the company's largest shareholder, with 9.2 million shares.
Loudcloud provides services that automate internet operations for other businesses. Yet analysts said one concern is that few people understand what the company does. Officially, Loudcloud offers a "new class of internet infrastructure services".
Another concern is that the company relies on dotcom customers, as Loudcloud reported 19 per cent of its sales derive from "internet-based businesses".
Joel Yaffe, an analyst at Giga Information Group, said: "They have to spend an enormous amount of money on third-party facilities and software and people. They just haven't given themselves enough time to prove out their business model before going public."
Loudcloud trades under the ticker symbol 'LDCL' on the Nasdaq National Market.
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