Three California Firms Soar in Their Trading Debuts - TheStreet

Three California Firms Soar in Their Trading Debuts

Sequenom, Quantum Effect and Turnstone Systems are stellar performers today.
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Three California companies reached dreamy heights Tuesday as their stocks skyrocketed in their first minutes of trading.

Turnstone Systems

(TSTN)

jumped 69, or 239%, to 98 around midday. (It closed up 68 3/16, or 235%, at 97.)

Also,

Sequenom

(SQNM)

surged 50 1/2, or 193%, to 76 1/2. (It closed up 53 1/4, or 205%, at 79 1/4.)

Quantum Effect Devices

(QEDI)

joined the others just after noon, rising 187%, or 30 1/16, to 46 1/16. (It closed up 40 7/16, or 253%, or 56 1/2.)

Turnstone, which is based in Mountain View, Calif., wires local telephone companies to set up and manage high-speed digital voice and data services over local copper phone lines between the phone company and the subscriber's home or office.

Together with lead underwriter

Goldman Sachs

, Turnstone raised $87 million on the sale of 3 million shares. Betting that last year's sprinting IPO market would have endurance, the company raised its initial offering price to $29 from a range of $15-$17.

Turnstone's customers include

Rhythms NetConnections

(RTHM)

,

Network Access Solutions

(NASC)

and

MGC Communications

. The company also has a marketing alliance with

Lucent Technologies

(LU)

.

Rhythms NetConnections and Network Access Solutions together accounted for about 60% of Turnstone's revenues in 1999.

Sequenom, which is based in San Diego, benefited as the demand for technology issues spilled over into biotechnology. The company raised $138 million by offering 5.3 million shares with the help of lead underwriter

Warburg Dillon Read

. Sequenom was initially slated to go off for about $17, but its offering price was increased to $26 as institutional demand strengthened for its gene sequencing technology.

Sequenom primarily analyzes variations in DNA through a process called spectronomy which could lead to drugs that will improve human health, agricultural yields, or livestock production. Sequenom is currently testing this technology at

Genzyme

(GENZ)

, the

U.S. Department of Agriculture

and the

National Institutes of Health

.

Quantum Effect, based in Santa Clara, Calif., makes high-speed microprocessors, or chips, used in computers, networking infrastructure equipment and other communications equipment.

The company and

Morgan Stanley Dean Witter

, the primary underwriter for the transaction, brought in $48 million on 3 million shares. Quantum Effect increased its initial offering price to $16 from the $10-$12 range as institutional investors opened their arms and wallets to the chip maker.

The chip company with $15.4 million in 1999 fiscal sales, wades into a market with aggressive big players like

Intel

(INTC) - Get Report

and

Advanced Micro Devices

(AMD) - Get Report

lurking.

It is focusing on the high-end markets like internetworking, Windows CE, high-speed printers, games, Internet TV and high-speed communications devices.

Quantum Effect will have to quickly build and diversify its customer base to meet the cutthroat challenges. Currently,

WebTV Networks

accounts for about a quarter of sales in the sector,

Cisco Systems

(CSCO) - Get Report

brings in 15% of sales and

EchoStar Communications

(DISH) - Get Report

another 10%. Quantum Effect receives royalties from fellow chip maker

Integrated Device Technology

, which account for 20% of sales.