Avanex Shares Rocket in IPO; Lockup Is to Expire Early

SAN FRANCISCO -- Shares of Avanex (AVNX Quote), a supplier of fiber-optic network instruments, boomed as expected in their market debut Friday. Less expected was the Fremont, Calif.-based company's princely arrangement with its investment bankers.

Avanex officers, directors and backers won from their white-shoe underwriter Morgan Stanley Dean Witter the right to sell another 11.3 million shares just 90 days after Friday's offering of 6 million shares -- provided the stock still trades at about twice its IPO price of 36. Federal rules will limit the individual sales somewhat, based on average trading volume and the number of shares outstanding.

While sometimes warning of concerns among key shareholders, insider selling can also demonstrate strong confidence in an IPO, especially when underwriters allow it to happen before the traditional 180-day lockup ends. By making this unusual adjustment for Avanex, Morgan Stanley has demonstrated a keen eagerness to retain its business. That's a bullish sign. ...