ArcSight IPO Braves the Turbulent Markets

Give security software maker ArcSight Inc. (ARST) credit for braving the jittery markets in making its trading debut last Thursday. After all, who else is going public these days, let alone technology players? The answer is not many.

ArcSight, which makes a package anti-virus, diagnostics, compliance and related security software, performed about as well as could be expected. After ArcSight priced its shares at the low end of their $9 to $11 range and raised $50 million, the stock closed at $8.78 on Thursday. They were down another 13 cents midday Friday, but still within sight of the $9 offer price.

It's unclear why the company decided to debut during a downturn in the market, although the small size of the offering may have encouraged ArcSight and lead underwriters Morgan Stanley and Lehman Brothers Inc. to plow ahead. The company was founded in 2000 and has raised $28.6 million in private capital. Investors include Kleiner Perkins Caufield & Byers, Institutional Venture Partners, Integral Capital Partners, New Enterprise Associates and In-Q-Tel, the venture capital firm of the CIA, although In-Q-Tel was the only one of those shareholders who sold in the offering.

If the market manages to right itself anytime soon, ArcSight's initial price could be seen as a bargain a few months out. But investors may wait to see its first earnings as a public company before jumping in. - David Shabelman

See Feb. 15 story from MercuryNews.com

See Feb. 14 story from SC Magazine

See profile of ArcSight at IPOhome.com