Optical network equipment supplier Cyan Inc recovered early losses on its heavily traded market debut as investors look to its ability to reduce dependence on a single customer.
Nearly 3.5 million shares had been traded by 2.00 p.m. ET, making Cyan (Petaluma, CA, USA) the fifth most-traded stock on the New York Stock Exchange on Thursday afternoon.
The Petaluma, California-based company priced 8 million shares in the offering at $11 each, the mid-point of its planned price range, giving it a market valuation of about $490 million.
Chief Executive Mark Floyd said Cyan planned to reduce its dependence on telephone company Windstream Corp, which accounted for about half of Cyan's revenue in 2012.
"Last year, we added 50 new customers and we expect those customers to start turning on this year," he told Reuters.
Windstream, which reported lower-than-expected first-quarter profit on Thursday, has been grappling with slowing sales at its fixed-line business. The company cut up to 400 management jobs in March and warned it may cut its 2013 capital expenditure.
Cyan, which is backed by venture capital firms Norwest Venture Partners and Azure Capital Partners, offers software-defined network (SDNs) services that allow change of networks and data centers, avoiding upgrades to expensive and proprietary hardware.
The potential of the nascent SDN market has attracted big names, with VMware Inc acquiring network virtualization firm Nicira for $1.05 billion last year.
Cyan shares opened at $10.05 before recovering to trade around their IPO price.
Cyan posted a net loss of $16.6 million on revenue of $95.9 million in 2012. The company is yet to report a profit since being set up in October 2006.
Floyd said the company was going public to expand its business and boost credibility among customers.
"You don't want to be pigeon-holed as a start-up company. We've been around for six years," Floyd said.
(Editing by Sriraj Kalluvila)