Dell SecureWorks, 2016's first tech IPO, fizzles on Wall Street
By Jim Finkle and Heather Somerville
(Reuters) - The lackluster market debut of SecureWorks Corp, the cyber unit of Dell Inc, failed to rally the battered technology U.S. IPO market on Friday, a reminder that Wall Street does not welcome cash-burning companies without profits.
"I don't think it encourages anybody to hop on the bandwagon and go public," said Robert Thomas, CEO of San Francisco-based security startup CloudPassage.
SecureWorks priced below its indicated range and opened the day even lower; it also cut the number of shares it was offering from 9 million to 8 million. The shares closed Friday at $14, slightly up from their opening price of $13.89.
In the first U.S. technology IPO this year, ending the longest drought in seven years, many investors and cyber security entrepreneurs hoped SecureWorks would reinvigorate the market and instill confidence in cyber firms.
Stock market volatility last year and early this year may have scared off some listings. Cyber security companies that have put IPO plans on hold include Carbon Black, Veracode, Blue Coat and Zscaler, according to venture capitalists.
The recipient of billions of dollars of venture capital, both private and public cyber security companies have come under heightened scrutiny. Share of cyber firm FireEye, Barracuda Networks, and Rapid7, the most recent high-profile cyber security IPO, are all down by at least half.
"It's pretty tough sledding out there," said Matthew Prince, CEO of CloudFlare, who has rejected weekly solicitations from investment bankers encouraging him to take his company public.
By this time last year, six technology companies had priced IPOs, raising a total of $1.6 billion, according to Thomson Reuters data. In the first half of 2014, 23 technology IPOs had raised $3.7 billion, according to market intelligence firm Ipreo. Continued...