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Critical mission for Ixia

Issuer: IxiaAmount: $82 millionDate: October 17 2000Bookrunner: Merrill Lynch

In a year when tech and internet stocks took a hammering, few such deals stand out. One of them was Ixia, which came to market on October 17.

It was hardly a good time for new issues, as the Nasdaq and the Dow Jones indices were both suffering another dizzy downturn, registering 10% and 6% losses in the days before the deal was priced. And the composite of stocks of comparable companies was down 15%. Only one other deal was priced during Ixia's 10-day roadshow, and 16 deals had been pulled.

Nonetheless lead-manager Merrill Lynch decided to go ahead. "Ixia has strong business fundamentals and financial characteristics," says George Francisco of Merrill's equity capital markets group. "It has growth on the top line, and a strong profit on the bottom line." Its gross margins are significantly above the industry norm at 80%, and it has a bottom line strong enough actually to allow investors to assess it on a price-earnings basis.

That comes from what Francisco calls Ixia's "mission critical" work for its clients. "It's a tech equipment maker, which is usually an important but relatively mundane business. But in Ixia's case it makes the equipment which its clients use to test their equipment.

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