Tellium holds successful IPO

Tellium yesterday pulled off a rare feat in today’s economy: a successful IPO.

The optical networking vendor offered 9 million shares of common stock priced at $15 per share. Those shares were up 40% to $20.93 at the end of their first day of training.

Tellium officials declined to comment, citing a post-IPO quiet period.

According to Jennifer Pigg, executive vice president of The Yankee Group, the IPO’s success is due to Tellium’s existing contracts with service providers.

“I think orders in the bank are what really make a difference in this world right now,” she said. “The fact that Tellium has over $1 billion in orders, albeit multi year, speaks very well for them.”

In addition, Pigg sees the success of Tellium’s IPO as a sign of the market having steadied somewhat. “I’ve seen a slight turn around ever since March. It seemed to hit rock bottom around March. It’s sort of been stabilizing over last couple months. The common view is that as overvalued as all these stocks were last year, they are undervalued now,” she said.

While many might view a successful IPO as a sign of better things to come, Mark Lutkowitz, vice president of optical networking research at Communications Industry Researchers, sees this case as a glimmer of the irrational exuberance that dominated much of 2000.

According to Lutkowitz, Tellium’s aurora optical switch only grooms down to OC-48. What are needed, he said, are optical switches with more granular grooming capabilities, such as the CoreDirector from Ciena.

The success of Tellium’s IPO, he said, “might be the fact that the Ciena CoreDirector is doing so well. [Tellium’s product] fits in that space, but it’s lacking capability.”