Sequoia IPO does well

Software company raises $32 million

shares jump 25%


May 13, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

Columbia-based Sequoia Software Inc. braved a brutal IPO market yesterday, raising $32 million in its initial public offering.

Shares took a 25 percent bounce on the first day of trading, opening at $8 and closing at $10.0625. The company had trimmed back the pricing of its shares before the offering in the face of waning investor enthusiasm for new technology issues."We're thrilled with the reception we got, given the environment," said Sequoia Software Chief Executive Officer Richard C. Faint Jr. "We got a full offering out the door even though it's a very difficult market for IPOs."

Sequoia had twice trimmed back its share price.

On April 14, it cut its IPO price estimate range to $9 to $11 per share, down from $11 to $13.

On April 19, it trimmed the price again, this time to $8 to $10.

The 4.2 million shares sold yesterday - about 15 percent of the company- went off at the low end of that spectrum.

Still, Sequoia is one of the few IPOs scheduled for this month that have actually been issued. Several others have been tabled, while others that have been issued haven't fared well in trading.

The 170-employee company makes Internet software based on XML, or Extensible Markup Language, an advanced version of HTML that many Web sites are based around.

Sequoia was co-founded in 1992 by Anil Sethi and his brother-in-law, Mark Wesker.

Sethi, 41, a software engineer, worked at Hewlett Packard Co. and Apple Computer Inc. before co-founding Sequoia. Wesker, 38, formerly an attorney at Miles & Stockbridge, is president and chief operating officer; Sethi serves as chief technology officer.

Sequoia says its products allow its customers to create Internet portals where employees, customers, suppliers and others can connect and interact.

On the financial side, Sequoia reported a $12.8 million loss on sales of $8.4 million for 1999. Sales last year doubled over 1998, when the company booked $4 million in revenue.

In its S-1 filing for the offering, the company attributed sales growth to its customer base jumping from 13 in 1998 to 43 in 1999, and the first full year of sales of a new flagship product for creating interactive Web portals for businesses.

Faint said Sequoia intends to spend most of the money raised in yesterday's offering on expanding sales and marketing efforts to raise awareness of its products and services.

Sequoia has also embarked on an effort to diversify its customer base. In 1998, big customers included Blue Cross/ Blue Shield of Minnesota, which accounted for more than 20 percent of revenue, and the state of Texas, which accounted for 12 percent, according to the company.

Recently, it has added to its customer list the National Institute for Standards and Technology, Kaiser Permanente, PSINet Inc. and GE Power Generation.

The company's top competitors include Oracle, Broadvision and Open Market Inc.

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