The IPO Buzz: Why One Isn’t the Loneliest Number

Of course, there are a couple of speed bumps on summer’s IPO Highway; maybe that’s where the confusion sets in. It slows down surrounding the July 4th holiday and then closes down by mid-August ahead of the Labor Day weekend. But the floodgates are open for business the rest of the summer.
Since 1970, the “average” summer amounts to 82 IPOs and the “average” year amounts to 302 IPOs. The busiest summer on record, according to the U.S. Securities and Exchange Commission filings, came in 1986 when 248 of the year’s 728 IPOs were priced. That amounted to 34.1 percent of the year’s volume. The slowest summer came in 1974 when one – yes, just one – IPO was priced. The total IPO traffic in 1974 was nine. The slowest year came in 1975 when six IPOs were priced; three came to market during that summer.
One for the Clouds
This brings us to the present and the first week of June 2014.
Over the past several years, the IPO market has shut down during the Memorial Day week, and by mid-June, the bankers have hung up the “Open” sign. This year’s IPO market swings into gear sooner.
The action starts this week with a single offering.
True, there may be only one IPO on the calendar, but it is said to have the attention of the IPO players. The buzz started early. Here’s the deal:
Arista Networks (ANET – proposed) is a Santa Clara, California-based supplier of cloud networking solutions. The company’s solutions use software to address the needs of large-scale Internet companies, cloud service providers and next-generation data centers for enterprises.
Arista’s customers, according to the prospectus, “include six of the largest cloud services providers based on annual revenue, including eBay, Facebook, Microsoft and Yahoo!, financial services organizations such as Barclays, Citigroup and Morgan Stanley, and a number of media and service providers, including AOL, Comcast, Equinix, ESPN, Netflix, and Rackspace.”
The prospectus continued: “Our cloud networking solutions consist of our Extensible Operating System, or EOS, a set of network applications and our 10/40/100 Gigabit Ethernet switches. … Since we began shipping our products, we have grown rapidly, and according to Crehan Research, we have achieved the second-largest market share in data center 10/40/100 Gigabit Ethernet switch ports, excluding blade switching, sold in 2013.” Competitors: Cisco, Juniper, Brocade, Hewlett-Packard and Dell
Consider Arista’s first-quarter results:
  • For the three months ended March 31, 2014, Arista reported net income of $12.3 million, UP 86.4 percent from $6.6 million for the same period of a year ago.
  • For the three months ended March 31, 2014, Arista reported revenue of $117.2 million, UP 90.9 percent from $61.4 million for the same period of a year ago.
The deal is expected to be priced on Thursday evening, June 5, to trade on Friday morning, June 6.
For more information, please click here: Arista Networks
Looking into the second week of June, the calendar has just one IPO so far. It is expected to raise about $100 million. But more names could pop onto the calendar by the time that Monday, June 9, rolls around.
Stay tuned.
Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.