Masergy Communications Set To Go Public Next Week

NEW YORK (AP) - Computer networking services company Masergy Communications Inc. is the lone new company on deck to go public next week after a recent flurry of initial public offerings.

But it's likely just a breather for the IPO market, said IPOBoutique founder Scott Sweet.

"We're in holding pattern," Sweet said. "Just the quiet before what I think is a storm if the market continues to be at least stable." The Standard & Poor's 500 has climbed nearly 10 percent in the past three months.

Fifteen companies have gone public so far in February, with heavy demand for a few: Pipeline company Kinder Morgan Inc., medical cell phone app developer Epocrates Inc. and biofuels maker Gevo Inc.

In the same two-week span in 2010, only six companies went gone public. All priced below expectations.

There are 133 companies that have publicly declared IPO plans in the past 12 months and are waiting to go public, according to data provider Dealogic. Companies that got a tepid reception from investors in 2010 - those that private equity firms want to sell back to the markets from their portfolios - are having an easier time selling their shares.

Following Kinder Morgan's expanded IPO Friday, Freescale Semiconductor Inc. said it is planning to go public with an IPO that could raise $1.15 billion. Both have private-equity backers.

Masergy, which is set to debut on the market next week, has gotten investments from venture capitalists, who are selling some of their holdings in the IPO.

It's an offering in the technology sector, one of the best-performing industries in the 2010 IPO market. Masergy's software helps businesses manage their Web traffic. The company also offers "cloud computing" services that allow employees to access corporate networks remotely and helps businesses manage video-conferencing needs, among other services.

The company and its stockholders are selling 7.7 million shares in an expected range of $12 to $14 apiece. The IPO could raise $100.1 million if shares priced in the middle of that range.

Masergy expects net proceeds of $44.9 million after expenses. It won't receive funds from the sale of the 3.9 million shares by its stockholders.

The company says will invest the proceeds back into its business.

Masergy took a major hit during the recession as customers cut back on IT spending. It cut costs and focused on gaining new customers to assuage the hit to its revenue. In the last three months of its 2010 fiscal year, its customer cancellation rates recovered from their spike during the downturn.

Revenue rose 10.5 percent to $56.5 million in the six months ended on Dec. 31, compared to the same period a year before. Net income increased 24 percent to $1.7 million.