×

SecureWorks prices IPO at $14 a share, missing expectations

Joe Stewart, director of malware research at Dell SecureWorks, a unit of Dell Inc., works on multiple computer screens at his office in Myrtle Beach, South Carolina, U.S., Friday, Jan. 18, 2013.
Stephen Morton | Bloomberg | Getty Images
Joe Stewart, director of malware research at Dell SecureWorks, a unit of Dell Inc., works on multiple computer screens at his office in Myrtle Beach, South Carolina, U.S., Friday, Jan. 18, 2013.

Dell's cybersecurity unit SecureWorks raised $120 million in the first U.S. initial public offering of a technology company in 2016, less than it had hoped for, amid investor skepticism over its profit margins and prospects.

SecureWorks priced 8 million shares on Thursday at $14, missing its previously indicated $15.50-$17.50 range, according to a person familiar with the matter. The company was originally aiming to price 9 million shares.

The source asked not to be identified ahead of an official announcement. SecureWorks did not immediately respond to a request for comment.

The share issue market worldwide plunged to a seven-year low in the first quarter, more than halving from a year earlier to $106.6 billion, as worries over slowing economic growth kept investors wary, according to Thomson Reuters data.

"From such a low base, there's only one way to go and that's up," Jay Ritter, an IPO expert and a professor of finance at the University of Florida, told Reuters. "I don't expect that there's going to be a flood of IPOs, but there will be an increasing number of companies in a variety of industries that will go public."

In the past few years, several cyber security firms such as FireEye, Rapid7, and Mimecast have gone public to take advantage of growing investor interest in them after a spate of hacking attacks on companies including major banks and retailers.

However, shares of Rapid7 and FireEye, which popped 70-80 percent in their debut, are now trading way below their IPO prices. Mimecast, which jumped 20 percent on its listing day, has also slipped below its offering price.

Ritter warned against premium pricing for stocks of cyber security firms, saying that these companies were fighting for market share, which would keep their profit growth muted.