Simple Technology’s Shares Have Cool Debut: Down 12%
Shares of Simple Technology Inc. fell 12% Friday, the stock’s first day of public trading after the Santa Ana maker of computer memory chips raised $70 million in its initial public offering.
The stock price fell $1.31 a share to $9.69 in Nasdaq trading.
The company sold nearly 6.4 million shares to underwriters at $11 a share late Thursday, while existing shareholders kept about 30.6 million shares, or 83% of the stock.
Some Wall Street watchers figured the stock would do well on the Nasdaq market. But the highest it hit Friday was $11.03 a share. At one point it dipped to $9.
“The environment for new issues is still a little harrowing,’ said Lawrence York, lead portfolio manager of the $150-million WWW Internet Fund in Lexington, Ky. Simple Technology “looks like an interesting prospect. It’s just that those products are more like commodity goods.â€
The company’s memory and storage products are used in more-sophisticated computers, networking and consumer electronics, including flash-memory cards used in digital cameras and MP3 players.
The company said it would use the proceeds to pay down its debts, which include $25.6 million in long-term obligations, and to pay earnings that had not yet been distributed to existing shareholders.
The offering was led by Lehman Bros. and co-managed by Banc of America Securities and Fidelity Capital Markets.
Founded in March 1990 by brothers Manouch and Mike Moshayedi, Simple Technology has flowed with the highs and lows of the industry. It earned $12.5 million last year on sales of $192.6 million. The company has about 350 employees.
Manouch Moshayedi, chairman and chief executive, owns 27.3% of the stock. His brother, the company’s president, owns 24.4%. A third brother, Mark, is the chief operating officer and holds a 31.1% stake.
Dow Jones Newswires contributed to this report.
