Software/peripherals firm Retix sets IPO of $34 million issue on NASDAQ market.

Santa Monica-based Retix Inc., a designer, manufacturer and marketer of computer software and peripherals, plans to issue $34 million in stock and become a publicly traded company.

The 6-year-old company has applied to be listed on the NASDAQ national market system under the symbol "RETX."

Retix makes software and hardware to help mate different types of computers and computer software, and also to help computer networks -- such as a mainframe and set of personal computers -- work better.

Its recent filing with the Securities and Exchange Commission said, "As a result of advances in computer and software technology . . . organizations today have a multiplicity of computers that are incompatible. . . . Retix's strategy is to . . . develop and market technologies and products that provide network users connectivity and interoperability solutions."

Company officials were not available for comment last week.

Retix offers computer products to help create networks within companies, and help separate networks connect, according to the disclosure statements.

Retix is growing fast. According to its financial disclosures, it posted a net of $538,000 on revenues of $43.5 million in 1990, and sales in the first three quarters of this year are up 24.2 percent from last year's pace.

As recently as 1988, the company posted sales of only $17.6 million.

The 3.4-million-share Retix initial public offering, planned at $10 a share, is made up of 2.2 million new shares, and 1.2 million shares sold by existing shareholders.

Stephen Frankel, 45, is Retix president, chief executive, chief operating officer and chairman. Previously, he was president of Emulex Corp., a maker of computer disks.

Major shareholders in Retix include the Netherland Antilles-based Olivetti Partners, which will own 10.8 percent of the company's stock after the IPO; the Milan-based Sirti International, S.A., which will own 6.3 percent; the Menlo Park-based Menlo Ventures III, 6.7 percent; and the Dallas-based SRB Partners Fund L.P., 6.5 percent.

The Retix prospectus, prepared by the New York-based brokerage house Morgan Stanley, warns that purchase of the computer company shares involves a "high degree of risk."

A central feature of Retix's business strategy is promoting broader acceptance of its "Open Systems Interconnection," or OSI, software and hardware technologies -- the products that allow different computers and software to "talk."

While the 430-employee company hopes that its products become something of an industry standard, it warns in the prospectus that there is competition, and that computer technology evolves rapidly, frequently obviating the need for certain kinds of software.

Retix also sells the majority of its products outside the United States, although the domestic market is growing for the company, and accounted for 33 percent of sales last year. International sales are subject to trade laws and sanctions, and currency fluctuations.

Another risk to shareholders is that up to 6.6 million new shares could be issued nine months from the date of the initial public offering, and the new issues could be dilutive. The new shares would roughly triple the number of outstanding shares, although new capital would also likely be raised.