Good Track Record Boosts Lante’s IPO
Good Track Record Boosts Lante’s IPO
by Hal Plotkin
Silicon Valley Correspondent
As predicted, Lante Corp.’s {LNTE} initial public offering has caught fire, thanks to the company’s long-standing technology-oriented track record.
“Lante is on the list of top-tier companies that provide Internet professional services,” says Stephanie Moore, research director at the Giga Information Group, based in Norwalk, Conn.
The stock opened strongly Friday at 42, after pricing its offering late Thursday at 20 a share, slightly higher than its initial pricing range of 17 to 19 a share. The company also increased the size of its share offering from 3.1 million to 4 million shares.
Lante Post-IPO Stock-Performance Chart
Lante was founded almost 15 years ago to help other companies install and use new information-technology systems. In more recent years, Lante has transformed itself into an Internet professional services firm focused on helping new and existing businesses launch dot-com operations. The company’s clients, many of whom were customers well before the advent of the Internet, include the Gartner Group Inc. {IT}, Hewlett-Packard Co. {HWP} and Microsoft Corp. {MSFT}.
Dell Computer Corp. {DELL}, which has pledged about $40 million worth of business to Lante over the next five years, owns an almost 9 percent stake in the firm.
Analysts say the strong post-IPO performance of the stocks of other companies serving the same market opportunity, such as San Francisco-based Scient Corp. {SCNT} or Boston-based Viant Corp. {VIAN}, offer some clues about what may be in store for Lante’s stock.
Scient, for example, went public last May 13, with shares initially priced at 20, one dollar above its initial target price range. The stock has been hovering near the mid-80s this week after trading as high as 100 in early December. Viant has likewise seen a similar post-IPO run-up, going from $16 on its first day of trading last June 16, to more than 100 a share earlier this week.
Scient Post-IPO Stock Performance
Viant Post-IPO Stock Performance
“I have optimistic expectations,” says Meredith Whalen, program manager for application service providers and Internet services research at International Data Corp., based in Framingham, Mass. “Looked at on the basis of what comparable companies have done, I would expect [Lante’s IPO] to do well.”
Projections of soaring demand for the company’s products and services are one reason analysts are optimistic about Lante going forward.
The overall market for Internet professional services, which are needed to bring businesses online, is projected to grow to more than $78.6 million in 2003 from $7.8 billion in 1998, according to IDC.
“There is plenty of room for companies such as Lante to continue being successful,” says Preston Dodd, an analyst at Jupiter Research, based in New York. “Right now, there is more work than they can possibly do.”
“We know of no Web sites that are becoming smaller and simpler,” Susan E. Aldrich, a senior consultant at the Patricia Seybold Group, based in Boston, wrote in a recent research report.
Dodd says Lante benefits from being an elder in a young, fast-moving industry. “Lante has a wealth of experience solving technology problems,” he says. “There is some maturity there you might not see from some of the other companies that are just springing up. So there’s a nice value proposition.”
Lante’s experience working with client-server systems comes in particularly handy, Dodd says, now that many potential customers must modernize old legacy client-server systems, sometimes called “back-end” operations, to work seamlessly with more modern Internet or e-commerce applications.
Whalen agrees with other analysts who say Lante’s experience with previous technologies is a major asset. “That’s critically important for a lot of customers,” she says. “How to link the Internet with back-end systems is a key component of how to do these online systems.”
Whalen adds that she is particularly impressed with Lante’s seasoned executive team, which was augmented last year by the company’s selection of Rudy Puryear as its new chief executive officer and president. Puryear is a 30-year information-technology industry veteran who previously served as Andersen Consulting’s global managing partner for e-commerce. In that role, he was responsible for the overall direction of Andersen Consulting’s e-commerce strategy.
“Puryear knows what the company should look like five years from now,” Whalen says.
Dodd sees room in the market for smaller players such as Lante despite continued consolidations in the industry.
“It’s an interesting thing,” Dodd says. “You’re going to see more consolidation and more new players. It’s an unsettled landscape. But as long as there is more work to be done than people to do it you’re going to continue to see these kind of market valuations.”
Lante posted net income of $28,000 on revenue of $21.3 million for the nine months ended Sept. 30, compared with net income of $1.04 million on revenue of $11.12 million for the same period a year earlier.
The company, which is rapidly adding new employees, expects to report overall operating losses for fiscal years 1999 and 2000, according to its S-1, Lante’s official pre-IPO filing with the Securities and Exchange Commission.
