Chordiant Software, a supplier of infrastructure that brings together information about customers from disparate systems, is the latest company to see its initial public offering get off to a flying start.
The offer price of $18 had been revised upwards three times from a pre-launch range of $8 to $10, and within two hours of commencing dealings had reached $54, a premium of 200 per cent, before settling back to about $43. This is a gain of 139 per cent.
Chordiant raised net cash of about $80m on the launch and ranked as the largest percentage gainer of the day on Nasdaq. The supplier will use the money to pay off debts of $10m before applying the remainder to general operational needs.
In recent weeks there has been a backlash against internet startups as Wall Street analysts emphasise the need to make profit. In the last three years, Chordiant has consistently posted losses as it developed its CCS product suite. The company has an accumulated deficit of $62m.
Although Chordiant expects to post losses throughout 2000, chief executive Sam Spadafora said the company is different to other startups that have fallen from favour. "We're providing infrastructure for the business-to-business market and not in consumer. I am a firm believer in growing revenue and developing profit," he said.
Spadafora acknowledged that increasing the number of staff for expansion has been challenging, but said Chordiant was "successful in taking on new hires prior to the initial public offering". Steve Sherman recently joined the company as senior vice president engineering from a similar position at Vantive.
Chordiant, which started life in 1991 as a services business, provides the technical infrastructure needed to allow companies a single view of the customer.
Financial services institutions usually cannot make copies of sensitive information and so it is difficult to aggregate information about their customers. "We leave the data where it is," said Spadafora.
Erin Kinikin, a research director for customer relationship management at Giga Information Group, said: "I haven't heard much from Chordiant recently. It has very few, but large, customers. One or two big deals could move the stock."
Last week, Firepond, a product configuration and sales force automation software vendor, went to market at $22 per share, raising $110 million in cash. The company's share price rocketed up to $100.25 on the first day before settling back to trade between $75 and $84.
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