Marimba Inc’s post-IPO honeymoon appears to be over, as its stock plunged yesterday following a lukewarm rating from Morgan Stanley Dean Witter & Co. The Palo Alto-based company’s stock received a neutral rating as Morgan Stanley began coverage. The news was bad for a substantial drop in Marimba’s stock, which closed at $46 – down $11.375, or roughly 20%, on the day.
The rating is more interesting still when you take into account that Morgan Stanley was the lead underwriter of Marimba’s IPO, which it got away on April 30, seeing the stock soar 204% on the first day. There were rumors leading up to the weekend that Morgan Stanley’s Mary Meeker was going to start coverage with at least a buy rating, hence the sharp drop off on the news.
And anybody would think that Marimba is struggling to find customers by its announcement of a deal with Earthlink Networks Inc, which we knew about back in February (02/22/99). Earthlink’s using the company’s Castanet product to distribute its internet access software to its 1 million or so customers.
