The initial public offering of Internet infrastructure company Cobalt Networks (Nasdaq: COBT), which develops server appliances, was expected to get off to a sizzling start on Friday, and it did not disappoint. The stock of Cobalt, which priced five million shares at $22, opened at 140 and climbed as high as 158 before closing at 128-1/8, a gain of more than 482 percent for the day. This was the third-best first day gain in history, trailing only theglobe.com (606 percent) and Foundry Networks.
Of course, theglobe.com has had a tough time in the markets since its IPO, but don’t expect Cobalt to take a similar path. Like recent IPO sensations including Foundry and Akamai Technologies, Cobalt is an infrastructure play that should keep growing as the Internet grows. Cobalt, which develops Linux-based products, has an additional advantage right now, because companies like Red Hat have made Linux a red-hot sector.