Ruckus Tanks in Debut as NYSE ‘Lets the Dogs Out’
The Ruckus Wireless (RKUS) web site on Friday features the statement, "Who Let the Dogs Out? The New York Stock Exchange, That's Who." This declaration is likely a bit more apt than the Sunnyvale, Calif.-based wi-fi equipment maker would like because, after pricing at the high end of its $13-$15 range on Thursday, the company (whose logo is an illustration of a barking canine) had what some would call a dog of a debut as it ventured into the public realm.
Shares of Ruckus ended down 18% from their $15 offering in the midst of a post-election market rout that has seen several other companies withdrawing their initial public offering (IPO) deals (and at least two of them, Radius Health Inc. and Silvercrest Asset Management Group Inc., citing "market conditions" as the reason).
Goldman Sachs (GS), Morgan Stanley (MS) and Deutsche Bank AG's (DB) Deutsche Bank Securities were the lead underwriters in the Ruckus IPO; the company sold 8.4 million shares in a deal initially valued at $126 million. Its competitors include companies such as (the much larger) Cisco Systems Inc. (CSCO), Aruba (ARUN) and Hewlett-Packard Co. (HPQ) and its customers include mobile and cable companies such as Time Warner (TWC) and Towerstream (TWER). The company also works with customers in industries including education, retail, health care and hospitality.
A large chunk of Ruckus's revenue streams in from foreign customers such as Japanese-based KDDI Corp; telecom-industry weakness in both Europe and the U.S. has had a negative effect on network equipment makers over the past year. Cisco actually surprised investors with its better-than-expected earnings report earlier this week, but caution remains on the company and the industry as a whole, especially considering continued weakness in Europe.
Motorola Mobility has a 5% stake in Ruckus through a partnership forged before the IPO, and venture-capital backers Sequoia Capital will hold on to around 25% of Ruckus shares now that it's public.
