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As mobile carriers look to Wi-Fi, Ruckus looks to cash in with IPO

The company specializes in Wi-Fi networks designed to help carriers boost their wireless capacity

By , IDG News Service
November 16, 2012 07:50 AM ET

IDG News Service - The initial public offering of Ruckus Wireless on Friday highlighted the growing importance of Wi-Fi in mobile networks as service providers try to meet the demands of smartphone and tablet users.

Ruckus, a maker of Wi-Fi network gear based in Sunnyvale, California, focuses on products for carrier-owned networks in public places as well as for enterprises. Though it is dwarfed by its main competitors, Ericsson and Cisco Systems, Ruckus is riding a wave of growth in Wi-Fi for the kinds of mobile services that used to be solely the province of cellular networks, industry analysts say.

Wi-Fi is one of many technologies for solving the so-called spectrum crunch that carriers say could degrade mobile service, according to Ruckus CEO Selina Lo.

"Operators are going to use all the tools they have," Lo said in an interview Friday following the IPO. "Wi-Fi happens to be a very cost-effective tool. It's the cheapest way to carry a bit ... in a wireless network."

Ruckus began operations in 2004 and has about 600 employees, giving it just a fraction of the overall size and experience of rivals Ericsson and Cisco. But in a filing on its planned IPO to the Securities and Exchange Commission, Ruckus said its revenue in the first nine months of this year was 93 percent higher than in 2011's first nine months, reaching $152.5 million. The company said its profit also grew.

Listing on the New York Stock Exchange under the ticker symbol RKUS, the company offered 8.4 million shares at $15 per share, raising about $126 million. The stock dipped after the market opened and was down $0.70 at $14.30 in midday trading. Lo downplayed the company's first-day performance. "It's too bad that the stock market is currently not very strong," she said.

"We're not looking at a day or a week or even a year," Lo said. "For us, this is part of the process of building a long-term strong company." Going public will give Ruckus more credibility with service providers, she said.

The company's new capital might also go into acquisitions. "If I see a technology that makes sense, certainly I will not be shy about going after it," Lo said.

Cellular carriers rely mostly on their own licensed frequencies to carry their subscribers' data traffic. But despite the growing efficiency of mobile technologies such as LTE, the service providers foresee such heavy use of mobile data in the coming years that they think their networks may run out of capacity to carry it all. Older 3G networks have already given subscribers maddeningly slow performance in some areas when bandwidth-hungry new devices such as the iPhone became suddenly popular.

Wi-Fi is available to any service provider that wants to supplement its own spectrum, because it's built into almost all mobile devices and runs on frequencies no one owns. Wireless analyst Craig Mathias of Farpoint Research estimates there is about 800MHz of Wi-Fi spectrum available around the world, compared with 20MHz in a typical pair of cellular bands used by a carrier.

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