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Inphi predicts $10-$12 IPO price

By   /   Friday, November 5th, 2010  /   Comments Off on Inphi predicts $10-$12 IPO price

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Inphi Corp., the chip design firm with a big presence in Ventura County, expects the shares of its initial public offering to sell for between $10 and $12.

With shares scheduled to hit the market as early as Nov. 10, Inphi would raise $74.8 million if investors buy in the middle of its range. It is applying to trade on the New York Stock Exchange under the symbol IPHI.

Founded in 2000, Inphi has its headquarters in Santa Clara but its major operations in Thousand Oaks and Westlake Village. The company designs high-speed chips that make the Internet faster and that beef up the servers for online video and other fast-growing Web-based services.

After soldiering through the aftermath of the dot-com bust, when hardware was not hot, the company showed a profit of $130,000 on $37.6 million in revenue in 2009. In the first nine months of this year, it has made $2.5  million in net income on $41.7 million in revenue.

“There’s no bad news in any of the financials,” said Lloyd Greif, CEO of Greif & Co., a Los Angeles-based mid-market investment bank. “It is a return to what you expect to see in an IPO, and a welcome return at that. IPOs aren’t designed to be bailouts, but rather fuel for the engine so the company can grow faster.”

And that looks to be exactly what Inphi wants to do. The company’s executives are prohibited from talking to the press by the U.S. Securities and Exchange Commission in the period leading up to the IPO.

Inphi is hoping that investors believe that a bet on its stock is a bet on more and more people watching streaming video on YouTube and Netflix — that is, a no-brainer. Netflix’s streaming movies account for 20 percent of North American Internet traffic during peak times, according to recent a study by Sandvine, an analytics firm.

“Our business is basically driven by video,” Loi Nguyen, a co-founder of the firm who is now vice president of networking and communications, told the Business Times earlier this year. “YouTube alone uses more bandwidth today than the entire Internet did in 2000.”

Morgan Stanley, Deutsche Bank Securities, Jefferies & Co., Stifel Nicolaus Weisel and Needham & Co. are underwriting Inphi’s deal. After the deal, early investors Walden International, Tallwood Venture Capital and Mayfield Fund would still own about 70 percent of Inphi, though they would be free after six months to start trading their shares.

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