Virage IPO nets small first-day gain

Virage IPO nets small first-day gain
By Richard Goering, EE Times
August 2, 2000 (5:03 p.m. EST)
URL: http://www.eetimes.com/story/OEG20000802S0022

FREMONT, Calif. — Embedded memory provider Virage Logic joined the NASDAQ and saw its first day of trading yesterday (Aug. 1), completing the latest IPO in the silicon intellectual property market. The IPO, combined with several private placements, brings the total investment in this small company to well over $60 million.

Investors were only mildly impressed, pushing Virage stock (VIRL) up around 4 percent to $12-7/16. But Adam Kablanian, Virage president and chief executive officer, expressed satisfaction with the outcome and strong optimism about the company's future.

The company's fiscal 1999 revenues, for the year ending Sept. 30, 1999, were $9.58 million, with $180,000 in losses. Virage has posted losses for three consecutive years, and its S-1 statement warns of an accumulated deficit of $13.7 million as of March 31, 2000.

Yet Virage's growth is undeniable. Revenues for the quarter ending June 30, 2000, were $5.1 million, more than double that of the previous year's quarter. From January 1999 to June 2000, the company grew from 38 to 126 full-time employees.

Given the NASDAQ's plunge the previous week, Virage's first day of trading went very well, Kablanian said. "I feel great, particularly since the NASDAQ was down, and we managed to gain a point from the beginning bell," he said. "It's a very good outcome for us."

Kablanian said that the company's net losses stem from "one-time noncash-based charges," such as employee stock options, and that Virage has actually been "profitable on operations" for seven quarters in a row.

Girding for downturns
The company decided to go public, Kablanian said, to gain the momentum needed to become the leading supplier of embedded memory. He said going public will make it easier to acquire companies or products and will raise cash so Virage can weather future downturns in the semiconductor market.

Virage's products include the Custom -Touch line of memory compilers and the Embed-It suite of software tools, along with custom design services. However, Virage is positioning itself as an intellectual property company, not as an EDA company, Kablanian said.

Virage's IPO placed 3.75 million shares on the market. This coincides with an additional private placement of 400,000 shares with Crosslink Capital. The two together raised $49.5 million, on top of the $13.5 million raised in two previous financing rounds.

Virage customers include fabless semiconductor vendors and semiconductor makers. In fiscal 1999, four customers — ATI Technologies, MMC Networks, National Semiconductor and Toshiba — generated over half of Virage's revenues.