IPO VIEW-IPO by profitable tech firm may add momentum
Sunday June 8, 12:18 pm ET
By Per Jebsen
biz.yahoo.com
NEW YORK, June 8 (Reuters) - FormFactor Inc., a profitable maker of semiconductor testing tools, plans a $55 million initial public offering this week, reawakening the moribund U.S. IPO market.
The Livermore, California-based company and stockholders expect to sell 5.5 million shares at $9 to $11 each, in an offering scheduled for Wednesday that underwriter Morgan Stanley (NYSE:MWD - News) will lead.
FormFactor designs and manufactures "high performance advanced semiconductor wafer probe cards," according to its IPO filing with the Securities and Exchange Commission (News - Websites).
The cards overcome the limitations of conventional wafer probe cards and will permit more advanced tests that speed the semiconductor manufacturing process, FormFactor said. In the first quarter of 2003, the company earned $699,000 on revenue of $18.7 million
FormFactor reflects the IPO market's reversion to quality offerings, said David Menlow, president of newsletter IPOfinancial.com.
"The IPO market is gaining more momentum in the belief that whatever will be coming to market in the next few months will be the better deals at lower valuations than we've seen in quite some time," he said.
"Investors will focus on this deal as a very important deal for market psychology, and I believe it will get a good reception," he said.
Interest in IPOs has increased as broad market indexes have surged. The Standard & Poor's 500 Index (CBOE:^SPX - News) is up about 23 percent since March and the technology-focused Nasdaq Composite Index (NasdaqSC:^IXIC - News) has risen about 28 percent.
After FormFactor, the next scheduled IPO is by Maguire Properties Inc. The office building owner plans to raise $730.2 million during the week of June 23, in a transaction led by Credit Suisse First Boston and Citigroup Global Markets. On Wednesday, Maguire said it had begun marketing the deal.
MOMENTUM
In an indication of momentum, several companies last week set terms for their proposed IPOs.
Digital Theater Systems Inc., a provider of digital surround sound audio technology, on Thursday said it plans to offer 3.4 million common shares at an estimated range of $14 to $16 each, raising about $51 million. On Tuesday, Intervideo Inc., a provider of digital video software, said it would sell 2.3 million shares at $11 to $13 each, raising about $27.6 million.
There are 28 companies planning U.S.-registered IPOs that would raise about $5.22 billion in the IPO backlog, according to data provider Dealogic LLC. The seven IPOs this year, which raised $1.31 billion, have fared well once trading began, with an average rise of 37 percent from the initial price, Dealogic said.
"If the market continues to move higher, we will see IPOs begin to emerge," said Tim Ghriskey, a money manager with Ghriskey Capital Partners LLC.
The boom in stock and convertible security sales by established companies is a "first sign of market health," he said.
"(Nonetheless), the still somewhat tenuous market environment makes companies and investment banks reluctant to immediately jump back into the IPO market arena," Ghriskey said.
A striking contrast exists between the IPO and secondary stock sale markets, Menlow said. In 2000, at the height of the tech boom, IPOs and secondary stock sales were roughly equal, at about 400 each. To date in 2003, there have been only seven IPOs but 92 secondary sales, he said.
"The war and the build-up to the war was like a rocking chair on a garden hose, it squeezed off all the IPO flow, but secondary pricings have been steady and working without making any headlines," he said. |
