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Jamdat Shares Rise 41% in Debut

The cellphone game maker's stock jumps to $22.51 from the IPO price of $16. Its market cap is now $439 million.

September 30, 2004|David Colker | Times Staff Writer

Jamdat Mobile Inc. rang up major gains Wednesday as the cellphone game maker's stock rose 41% in its first day of trading.

Enthusiasm for the Los Angeles company, best known for an animated bowling game, underscored investors' belief that people with wireless phones are eager to use them like Game Boys. About 20 million cellphone owners in the U.S. will buy video games for their phones this year, a number that is expected to reach 60 million by 2007, according to market researcher Adventis.

"It's a hot button for the market right now," said David Menlow, president of the IPO Financial research firm in Millburn, N.J.

Four-year-old Jamdat sells its games through Verizon Wireless, Sprint PCS and nearly 80 other mobile phone carriers in 39 countries. Besides "Jamdat Bowling," its other titles include "Lord of the Rings Pinball," "NBA One-on-One" and "Safari Hunter V."

Jamdat, which also offers customized ring tones for cellphones, reported its first profit of $1.2 million on $15.5 million in sales during the first half of this year. It lost $7.1 million on sales of $13.5 million last year.

Trading under the symbol JMDT, the stock rose to $24.32 in early Nasdaq trading before settling into the $22.50 range. It rose above $23 late in the trading day before closing at $22.51 -- a substantial increase over its $16 offering price Tuesday.

"The buzz on the company started last week," said Sal Morreale, who tracks initial public stock offerings for Cantor Fitzgerald in Los Angeles. "Anyone who has kids has a good chance of knowing about their bowling game. My 18-year-old loves it."

The original "Jamdat Bowling" and its sequel generate about 25% of the company's revenue, according to the company's filing with the Securities and Exchange Commission. Jamdat's games typically cost $3.99 to $7.49 for a one-time purchase or $1.49 to $2.99 for a month subscription. Wireless carriers take a cut.

In its SEC filing, Jamdat cited research from the London-based consulting firm ARC Group that said worldwide wireless game revenue was expected to grow from $1.1 billion last year to $8.4 billion in 2008.

But Jamdat also highlighted several risks to its business. It relies on Verizon and Sprint for nearly 60% of its revenue, and those carriers could drop Jamdat's games or demand bigger commissions. In addition, it expects to face competition from such deep-pocketed entertainment companies as Walt Disney Co. and Electronic Arts Inc.

But those worries were overshadowed Wednesday by a first-day stock performance that gave the company a market capitalization of $439 million, putting it in the same range as supermarket chain Winn-Dixie Stores Inc. and Delta Air Lines Inc.

The company raised more than $60 million in the offering, which it said it would use for working capital and general corporate purposes. It also said it might use the funds to acquire other businesses.

Chief Executive Mitch Laskey, a 42-year-old veteran of video game maker Activision Inc., sold 75,555 shares in the offering for $1.2 million. His remaining 1.06 million shares rose in value from just under $17 million at the start of the day to nearly $24 million by the end.

Other beneficiaries included Sun Microsystems Inc., which sold more than $10 million worth of stock, along with Intel Corp.'s venture capital arm and Sprint EWireless Inc., which each sold about $5 million in stock. ECompanies Enterprises, the Santa Monica technology incubator that hatched Jamdat, cashed in $2.4 million worth of stock in the offering. All of the companies retain multimillion-dollar stakes in the company.

Cellphone chip maker Qualcomm Inc. didn't sell any of its shares, which are now worth more than $50 million.

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