RADVision, FairMarket Soar After IPOs

Updated from 12:58 p.m. EST

A pair of new public companies Tuesday made a strong case that the IPO market was not cooling as some analysts had observed.

RADVision (RVSN) of Israel tripled during its first hour of trading as investors scrambled for a piece of the burgeoning voice-over-Internet-protocol niche. The company's shares surged 35 15/16 to close at 55 15/16, after trading as high as 65.

FairMarket(FAIM), an Internet auctioneer, became the second triple. Its shares surged 31 1/2 to close at 48 1/2 after trading as high as 53 1/2.

RADVision pulled in $76 million from the offering of 3.8 million shares, shepherded by lead underwriter Lehman Brothers. The company increased its initial price to $20 from an $11-to-$13 range amid strong institutional demand for the hot communications equipment market.

RADVision develops products and technology for real-time voice, video and data communications over networks that support packets of data.

ICM Global Intelligence, a market research firm, forecasts that revenues for network equipment associated with voice-over-Internet protocol, or Internet protocol telephony, will grow to $7.1 billion in 2004 from $477 million in 1999.

After the offering, German investor Siemens AG will own about 1.6 million shares and Korean electronics giant Samsung will own 1 million shares in private placements.

Shareholders put a considerable amount of faith in the belief that a consortium of a few large owners will act in their best interest. Two brothers, Yehuda and Zohar Zisapel, will own about 25% of the shares outstanding after Tuesday.

Together, the brothers, Siemens and some other existing shareholders, who will collectively own approximately 48% of the shares, have agreed to enter into a voting agreement under which they will act together in the nomination and election of directors, according to the company's filing with the Securities and Exchange Commission. These shareholders, as a result, may control the outcome of company actions that require shareholder approval, including takeover transactions in which shareholders would receive a premium to their share price.

In addition, several companies are mounting a tough-price-to-beat offensive in the market. Vovida Networks, for example, offers free open source code for software kits, which could affect RADVision's own software kit sales. Other competitors include Lucent Technologies (LU) and privately held Accord Networks.

With more than 250 customers including Alcatel (ALA), Cisco Systems (CSCO) and Nortel Networks (NT), RADVision nearly doubled its revenue in 1999 from the prior year with a net loss of 26 cents a share for the year.

FairMarket, meanwhile, raised $85 million on the sale of five million shares, under the guidance of lead underwriter Deutsche Banc Alex Brown. The stock was offered $17 a share, up sharply from its previously expected range of $9 to $11.

Microsoft(MSFT) owns about a fifth of the company. Sierra Partners and Excite@Home(ATHM) own 15% each.

Instead of offering a marketplace where peddlers bring their wares, FairMarket, based in Woburn, Mass., hosts auction through a company's own Web site in exchange for monthly and transaction fees. FairMarket's business enables companies to save money by not investing in the auction technology and support personnel needed for such operations.

The company's customers include Honeywell(HON), Microsoft, J C Penney(JCP) and ecampus.com.

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