It looks like investors couldn't wait to get a piece of SolarWinds Inc. (NYSE: SWI). The venture-backed tech company's IPO priced this morning at $12.50 a share, about a dollar more than expected. During the day, it went as high as $15.16.
That's great news for SolarWinds and its backers, but it may not be the long-awaited sign that the window of opportunity for IPOs is opening after months of being firmly slammed shut. SolarWinds has a 10-year record of profitability, a customer list that includes 80 percent of the Fortune 500, and the support of some of the sharpest venture capital investors around. If anything, its success suggests a sterling pedigree still goes a long way but riskier companies may have a harder slog on their way to going public.
Though its name makes it sound like a maker of solar cells or wind turbines -- or maybe wind turbines with solar cells on the blades -- SolarWinds is in quite a different business altogether. It competes with the likes of IBM (NYSE: IBM) and Cisco Systems (NASDAQ: CSCO) for enterprise software contracts with big companies.
A web-based distribution model keeps costs down. According to Renaissance Capital's IPOHome.com analyst Paul Bard (via Investor's Business Daily), "This is one of the most profitable software companies we've seen in quite some time."
All of which draws something of a contrast with tomorrow's hot IPO, online restaurant reservation service OpenTable, which wasn't profitable last year and could have a tough time growing quickly in the near future. If it can duplicate SolarWinds' success, it may be a sign of a rejuvenated IPO market. If it can't, it may be another sign that only rock-solid companies can go public at this point in the market cycle.
