Cobalt Networks Inc. –

MOUNTAIN VIEW, Calif. – Cobalt Networks Inc., a server appliance provider, went public November 5, offering 5 million shares at $22 apiece. The company’s stock priced at the top of its $20 to $22 filing range.

Underwritten by Goldman, Sachs & Co., Merrill Lynch & Co., BancBoston Robertson Stephens & Co. and SoundView Technology Group, the initial public offering left 27.3 million shares outstanding.

August Capital, Chase Capital Corp., TechFund Capital, TechFarm Management Inc., Vanguard Venture Partners and Crystal Venture Ltd. were venture backers. There were no selling shareholders.

The company manufactures server appliances, a network infrastructure device that helps its clients exchange information over computer networks. Unlike general purpose servers, server appliances are specifically designed and tailored to deliver one or a few network-based applications. As of October 1999, the company sold over 17,000 server appliances to more than 1,300 customers in 65 countries.

Cobalt expects the IPO to generate $101.3 million in proceeds, which will be used for general corporate purposes, including working capital, capital expenditures and the funding of operating losses. The company also might use a portion of the proceeds to acquire or invest in complementary products, technologies and businesses.

Cobalt has never been profitable, losing $1.8 million in 1997 and $10.5 million in 1998.

Gordon Campbell, a managing member at TechFund, has been the company’s chairman since October 1996.

Cobalt Networks – Selected Financial

(in thousands, except per share data)

October 18, 1996 Year Ended

(inception) Dec. 31 Nine Months Ended

to Dec. 31, 1996 1997 1998 Sept. 30, 1998 Oct. 1, 1999

Total revenue 3,537 1,513 13,849

Net loss -82 -1,757 -10,545 -6,679 -13,896

Net loss per share -4.09 -5.48 -3.67 -4.31