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Palo Alto Networks, Kayak make strong IPOs

SAN FRANCISCO (MarketWatch) -- Palo Alto Networks Inc. and Kayak Software both made big splashes Friday on their initial public offerings, with both tech stocks closing the day with gains of more than 25%.

Meanwhile, Fender Musical Instruments Corp. went the other way, pulling out its planned debut.

Kayak Software (KYAK) , which priced above range on Thursday night, closed up more than 27% on the Nasdaq to $33.18, compared to its $26 IPO price. The stock opened at $30.10. Kayak had originally planned to sell its 3.5 million shares at a range of $22-$25.

Palo Alto Networks (PANW) , a Silicon Valley-based firm that designs network-security products, jumped more than 26% from its IPO price to close at $53.13 on the New York Stock Exchange. The shares opened at $55.15.

The company priced its offering at $42 late Thursday. It had recently raised its IPO range to $38-$40 from $34-$37 earlier in the week, amid signs of strong demand for the shares. About 6.2 million shares were sold in the offering, with about 1.5 million coming from selling shareholders. Morgan Stanley, Goldman Sachs and Citigroup led the deal.

Both tech firms making their debuts on Friday are profitable. Palo Alto Networks turned a profit of $5.3 million for the nine-month-period ended April 30, with revenue more than doubling to $125 million compared to the same period last year. Kayak earned $4.1 million for the quarter ended March 31, with revenue up 39% to $73.3 million from the same quarter last year.

By contrast, weak demand seemed to have sunk the plans of Fender (FNDR) , which said Friday morning that it has withdrawn its planned initial public offering, citing "current market conditions."

The maker of guitars and other musical instruments had originally planned to sell about 10.7 million shares at a price range of $13 to $15.

But signs of weaker demand for the shares had emerged earlier in the week, with IPO Boutique citing in an e-mail Thursday morning that the deal was "highly price sensitive" based on slowing interest among institutional investors.

"Current market conditions and concerns about economic conditions in Europe do not support completing an initial public offering at what we believe to be an appropriate valuation at this time," Fender CEO Larry Thomas said in a statement Friday morning.

Fender had operating earnings of $5.3 million for the quarter ended April 1, with revenue up 2% to $173.8 million from the same period last year.