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Luminent IPO Disappoints Amid Decision to Cut Price

November 11, 2000|ANDREW BLANKSTEIN | TIMES STAFF WRITER

Fiber-optics company Luminent Inc. was a disappointment out of the starting gate Friday, with the stock closing just 13 cents above its initial offering price of $12 a share.

Luminent, a spinoff of Chatsworth-based MRV Communications Inc., was priced $1 below the bottom of the $13-to-$15 range predicted earlier in the week. When trading began the shares quickly fell as low as $10.75 before rebounding to end at $12.13. Volume was 12.2 million shares.

Shares of MRV (ticker symbol: MRVC) tumbled $4.69, or more than 14%, to $28.19.

Ben Holmes, founder of IpoPros.com, a Boulder, Colo.-based research group, said the poor reception may have stemmed from the company's last-minute decision to reduce the IPO price.

"For them to price it that low, almost nobody has an opportunity to react to that," Holmes said. "The clients are home at dinners with their family and they come in the next day and their reaction is almost going to be, 'This thing is going to be in trouble.' "

The problem, he said, is that "nobody wants to start off as a cold IPO. It's almost impossible to recover from something like that."

It didn't help that Luminent, which trades on Nasdaq under the symbol LMNE, debuted on a day the Nasdaq composite index swooned 5.4%, ending its worst week in almost seven months and hitting its lowest point in a year.

Luminent also came to market amid concerns that demand for fiber-optic components may be slowing.

The Chatsworth-based company makes lasers and transmitters and other optical components to direct light signals through "last-mile" fiber-optic telecommunications networks to homes and businesses.

Luminent is one of 14 companies--including Zaffire, Charlotte's Networks, Hyporium and Zuma Networks--MRV has created in an effort to become an optics incubator.

MRV has said it plans in the first quarter of next year a $108-million IPO for Optical Access, its wireless products division. Company officials declined to comment Friday on whether Luminent's poor showing would affect those plans.

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