Meru Has Sunny Day On Wall Street In IPO Debut

Meru Networks kicked off its initial public offering Wednesday and finished with its shares trading at more than $4-per-share above its initial offering price, capping a strong day on Wall Street for the wireless LAN vendor.

Sunnyvale, Calif.-based Meru priced its shares at $15 -- the high end of the $13 to $15 range it suggested earlier this month -- and was rewarded for its confidence, selling about 4.4 million shares and raising about $65.8 million on its first day on the Nasdaq.

Throughout the day, its shares were trading as high as $20.05 and finished at $19.17, up more than 25 percent per share from the initial offering price.

According to a press release from Meru, of the 4,386,784 common shares made available, 3,575,000 came from Meru itself and 811,784 came from Meru shareholders. Meru doesn't see any proceeds from the shareholder-owned offerings.

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The primary seller among Meru's selling shareholders was Vision Capital Advisors LLC, according to The Wall Street Journal, which will retail a 10 percent stake in Meru after the IPO. Vision Capital led one of the most recent rounds of private equity funding in Meru, in April 2009.

Bank of America Merrill Lynch was the principal manager on the IPO.

Meru effectively announced its IPO plans in December with the filing of a Form S-1 with the U.S. Securities & Exchange Commission. In the S-1, Meru confirmed an IPO worth up to $86.25 million in common stock and said at the time it would use the proceeds for working capital, expansion of sales and marketing, and research and development efforts, as well as capital expenditures.

In its S-1 filing, Meru reported revenue growth of about 27 percent year-over-year, from $54.7 million in 2008 to $69.5 million in 2009. Its 2009 net loss was $17.4 million, a 35 percent improvement from the $26.8 million it reported for 2008.

Founded in 2002, Meru recently retooled much of its executive team and professed a deeper commitment to the wireless LAN channel. The company has been eyed for IPO potential for several years, following the successful IPO by rival Aruba Networks in March 2007.

Brand awareness has been a consistent issue for Meru, one that the company is actively addressing, according to statements made in the S-1. Meru further noted it will continue to expand relationships with VARs and distributors. Westcon Group and ScanSource's Catalyst Telecom remain its principal distribution partners.

The push toward 802.11n wireless technology and the explosion of virtualization in the networking space both play to Meru's strengths, the company told last fall, and are helping its channel expansion.