Shares of Larry Ellison's NetSuite edged higher Thursday in its New York Stock Exchange debut after a sizzling $161.2 million auction drove the IPO share price to $26, double the $13 initially set by underwriters as the bottom rung of the expected price range.

Mr. Ellison, chief executive of Oracle and ranked No. 4 on the Forbes 400 list of richest Americans, saw the value of his 60.8 percent pre-IPO stake of 32.5 million shares hit $843.7 million. He sold 6.3 percent of the company's shares in the IPO.

In afternoon trading, shares of NetSuite, trading under the ticker symbol "N," were up $0.90, or 3.5 percent, to $26.90, an increase from the IPO price, but off the day's high of $27.70.

NetSuite, which makes on-demand software for small and medium-sized businesses, has yet to post a profit, recording a net loss of $35.7 million in 2006 and $20.6 million for the nine months ended September 30. Revenue, however, increased from $47 million in the nine months ended September 30, 2006, to $76.8 million for the corresponding period in 2007.

But Mike Fitzgerald, a venture capitalist whose firm has invested in similar software-as-a-service companies, said profits eventually fall to the bottom line.

"NetSuite is a $100 million company growing at 60 to 70 percent per year," he said. "A lot of SaaS companies are in this mode: Relative to the money they bring in each quarter, they have to spend a lot on sales and marketing. That revenue stream has to build up. … Eventually that marketing expense is dwarfed by the size of the customer base."

In Forbes' 2007 listing of the wealthiest Americans, Mr. Ellison was listed as having a net worth of $26 billion and was sandwiched between Google co-founders Sergey Brin and Larry Page ($18.5 billion each) and No. 3 Sheldon Adelson, a casino and hotels magnate with $28 billion.

Mr. Fitzgerald, founding partner of Waltham, Massachusetts-based Commonwealth Capital, said Mr. Ellison's high profile likely added to demand for NetSuite shares.

"You've got a celebrity owner--Larry Ellison," he observed. "It's hyped up. These things can get carried away because of the celebrity status of the offering."

In government filings, NetSuite said it plans to use the proceeds from the initial public offering for possible acquisitions and $10 million to $15 million to pay off a line of credit with Tako Ventures, Mr. Ellison’s investment vehicle.

Mr. Ellison moved 32 million shares, or about 60 percent of NetSuite's outstanding common stock, as of September 30 to a “lockbox” company as a way of neutralizing his voting control over NetSuite's board of directors and averting conflicts of interest given his role at Oracle.

The pricing of the NetSuite offering makes it one of the top 10 venture-backed IPOs in 2007.

Credit Suisse and W.R. Hambrecht managed the IPO using a modified Dutch auction format to find the top price at which all the offered shares will be sold. The Dutch auction format, which is rarely used, gained attention when it was adopted for Google's IPO in 2004.

The format arguably delivers good value to selling shareholders such as Mr. Ellison while leaving little room for the share price to climb once public trading begins.