Md. tech stock's debut is modest

The Baltimore Sun

Shares of Columbia network security company Sourcefire Inc. rose nearly 10 percent in its market debut yesterday before settling back to end with a modest gain.

The stock, traded on the Nasdaq under the ticker symbol FIRE, closed at $15.49, up 49 cents, or 3.27 percent, over the IPO price. During trading, shares hit a high of $16.45.

"That says that investors like the company," said William K. Smith, head of Renaissance Capital, a Greenwich, Conn., IPO research and investing firm.

The $15 IPO price set by underwriters Thursday night was $1 above the top of the $12-$14 range the company had estimated in regulatory filings.

Of the 38 IPOs that have taken place so far this year, about a third have priced above the initial range, according to Renaissance Capital.

Smith said in today's muted market, Sourcefire's performance was strong and its trademark technology - Snort - is fertile ground for growth.

Snort, Sourcefire's open-source intrusion-prevention technology, analyzes network traffic to protect against hackers. Sourcefire also makes software to manage that data, as well as real-time network awareness technology, which maps out exactly what the network looks like.

The sale of 5.32 million new common shares netted Sourcefire $74.2 million, according to documents filed yesterday with the Securities and Exchange Commission. Existing shareholders sold another 450,000 shares.

Underwriters, led by Morgan Stanley, have 30 days to purchase another 865,500 shares, according to the documents.

At yesterday's close, the company, which has 23.1 million shares outstanding, had a market value of $358 million.

"Everyone at Sourcefire is excited about passing this important milestone and entering the next phase of the business as a publicly traded company," said Wayne Jackson, Sourcefire's chief executive officer, in a statement.

The company declined to comment beyond Jackson's prepared statement, noting the quiet period of initial public offerings.

The stock began trading about 11 a.m. yesterday, opening flat and then dropping a quarter before recovering - movement some analysts saw as an indication of anxiety in the market.

"With a deal opening flat and falling, you had to have shaken some people up," said John E. Fitzgibbon Jr., founder of, an information firm in Jersey City, N.J.

Fitzgibbon said the vibrations likely were the result of Clearwire Corp.'s rocky IPO on Thursday. Shares of Clearwire, a wireless high-speed Internet provider in Kirkland, Wash., fell in the first day of trading.

David Menlow, president of, an independent research firm in Millburn, N.J., said Clearwire's initial public offering was being heralded as a litmus test for the success of the IPO market, and some viewed it as a failure.

Nervous investors

Investors also may have been nervous about last week, when the Dow fell more than 400 points in one day. Analysts said Sourcefire may have felt some of the burn of that market volatility.

"It opened unchanged," Menlow said of Sourcefire's stock. "It certainly showed an excessively high level of anxiety on the part of investors."

Sourcefire was founded in 2001 in the living room of founder and Chief Technology Officer Martin F. Roesch's Eldersburg home.

The company now has offices around the world.

Its investors include directors and executives of the company, as well as Sierra Ventures, New Enterprise Associates, Inflection Point Ventures, Core Capital Partners and Sequoia Capital, according to SEC filings.


Sourcefire made headlines in October 2005 when it announced plans to be acquired by an Israeli company, Check Point Software Technologies Ltd., for $225 million.

Security question

The acquisition raised national security issues and came under investigation by the Committee on Foreign Investment in the United States, the same agency that investigated Dubai Ports World's unsuccessful bid to run some operations at six U.S. ports, including Baltimore's.

Check Point pulled out of the deal in March 2006, and in October Sourcefire filed its application for an IPO.

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