Excerpt from an article; food for thought:
Call It the Incubator Premium
Yellowave (YWAV:OTC BB - news - boards), formerly a Los Angeles franchiser of hair salons (it'd be too difficult to make this stuff up), is sending emails to journalists to remind them that it's a technology company now. "Our future is as an incubator of high-tech companies, with initial investments in Israeli companies in wireless, telecommunications and fiber optics, as well as business-to-business and business-to-consumer e-commerce."
It's incubator magic! Yellowave's stock closed up 7/8 Thursday at 16 7/8, up from less than 3 in January. Its president is Israeli entrepreneur Ron Oren, who has shed the original hair-salon business and is now making tech investments in his homeland. Oren purchased Yellowave in August specifically to get its "shell" status as a public company and says he'll announce one or more exciting acquisitions next week.
When an outfit goes public this way, there's the question of why -- if it has such a hot plan -- it could not tap into the still-generous capital markets with a conventional IPO. Sometimes these companies are winners: Shares of Sensar (SCII:Nasdaq - news - boards), the Israeli-owned shell that bought a technology company called Net2Wireless (and was profiled here in January), are up about 40% since the beginning of the year.
On the other hand, don't forget Zapata (ZAP:NYSE - news - boards), the fishmeal company that caused a stir in the middle of 1998 -- and a huge, short-lived rise in its shares -- with its on-again/off-again Internet strategy. Zapata's shares bumped briefly over 20 at the time; they closed Thursday at 5 1/2.
One other "Presto! We're-An-Incubator" story hasn't been working out so well. Ventro's (VNTR:Nasdaq - news - boards) shares rose from 120 to 243 1/2 when it ceased to be life-sciences-oriented Chemdex and instead became a "horizontal" B2B company. By Thursday, the shares had returned to 140 1/8. |
