Bloomberg News

Ruckus Wireless Falls After Pricing IPO at Top of Range

November 16, 2012

Ruckus Wireless Inc. (RKUS:US), a maker of wireless-networking equipment, fell 18 percent in its trading debut amid a decline in telecommunications gear stocks, after raising $126 million in its initial public offering.

The shares fell $2.75 to $12.25 at the close in New York. The company sold 8.4 million shares yesterday at $15 apiece, the top of the proposed range. The S&P North American Technology Multimedia Networking Index fell less than 1 percent, while Juniper Networks Inc. (JNPR:US) dropped 3.4 percent to $16.32.

Ruckus, based in Sunnyvale, California, makes devices that let phone companies shunt data traffic from overcrowded cellular networks onto higher-capacity Wi-Fi. Optimism for the company’s growth prospects failed to make up for weakness in the broader market, which weighed on the stock’s debut, according to Sam Hamadeh, chief executive officer of PrivCo Media LLC, a New York-based firm that tracks private companies.

“The underwriters were far too optimistic,” Hamadeh said. “A lot of people were looking at Ruckus because they are a high-profile, venture-backed company. The reach was too far with these market conditions.”

Carriers are using Ruckus’s small networking devices that can be placed on telephone poles, street lights or roofs to relieve networks swamped by data traffic from smartphones.

“We believe there’s strength in our stock,” Selina Lo, CEO of Ruckus, said in an interview. “Despite the bumps here and there, we think the stock will sustain and grow over time.”

Increasing Gap

The company crossed several obstacles before the offering, including last month’s Hurricane Sandy superstorm, a snowstorm and then a post-election slump in the stock market, according to Lo. Ruckus filed on Oct. 5 to offer shares to the public.

Sequoia Capital is the largest shareholder and didn’t sell stock in the offering, regulatory filings show. The Menlo Park, California-based venture capital firm had a 24 percent stake in Ruckus following the IPO.

Revenue nearly doubled in the nine months through Sept. 30 to $152.5 million. Net income was $7.4 million, compared with break-even results in the year-earlier period, according to the prospectus.

The company said it has no specific plans for the proceeds from the offering, and may use them for acquisitions and general corporate purposes including sales and marketing.

Goldman Sachs Group Inc. (GS:US) and Morgan Stanley (MS:US) led the deal. The stock is listed on the New York Stock Exchange under the symbol RKUS.

Before starting Ruckus, Lo was vice president of marketing at Alteon Websystems Inc., where she oversaw an IPO and then a sale of the company to Nortel Networks Corp. for $7.2 billion in 2000.

“We are riding on the increasing gap between the demand for mobile data and the ability of public networks to increase their capacity,” Lo said.

To contact the reporters on this story: Elizabeth Wollman in San Francisco at ewollman@bloomberg.net; Peter Burrows in San Francisco at pburrows@bloomberg.net

To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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Companies Mentioned

  • RKUS
    (Ruckus Wireless Inc)
    • $13.38 USD
    • 0.23
    • 1.72%
  • JNPR
    (Juniper Networks Inc)
    • $23.69 USD
    • 0.44
    • 1.86%
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