Vibaby, this is a good sign for our chances on entering EVOK at or near the IPO price <knocking on wood with crossed fingers>. Hopefully, EVOK will go public on Friday with the higher profile Corio.
ipo.com
Analysts Say Dull Week Ahead For IPOs
Friday, July 14, 2000
Jeffrey R. Hirschkorn
Next week's IPO calendar offers a glimpse of an earlier investment era: a time when activity involving eye-catching deals slowed in summer, as there are only a couple of notable deals on deck.
Who could imagine a much brighter week than the one we are about to complete? No question: we've witnessed a few blockbuster deals this week, adding further evidence to support the theory that the IPO market will continue to see superb debuts from a select group of entrants.
However, next week's calendar will have to really shine to contribute to that theory, as there are only a couple of deals that merit close attention.
Preoccupied By Late July
The calendar may look to raise $1.2 billion from 16 prospective entrants, but analysts surveyed are concerned that the large number of deals may be overshadowed: they fear investors may stay on the sidelines until the week of July 24, where 23 firms have tentatively penciled in dates to consummate deals.
"IPO traders are not looking for any fireworks from this group," said John E. Fitzgibbon Jr., new issue editor at World Finance Net and creator of The IPO Aftermarket, now a Thomson Financial newsletter, in a recent report. "Today's stock market is vastly different than in February when all that many dot-com IPOs had to offer was a record opening-day pop."
Foreign Maneuvers
While there are 16 deals lined up to debut next week, there are a couple of other IPOs investment bankers plan to sneak by without fanfare. Of course, it would surprise no attentive investor that these are foreign issues with ADR deals.
Why is there such confusion? It's quite simple: underwriters sometimes conduct overseas IPOs - an abridged version of a private placement - in order to reduce/eliminate attention to the deal, analysts say.
For example, Morgan Stanley Dean Witter is scheduled to price Aptech Monday evening, and according to officials at the syndicate of Morgan, no terms have been put out for the IPO. In fact, we don't even know what exchange the deal will trade on.
Nevertheless, while there are two other foreign issues penciled-in to price, analysts argue that this type of banking practice should be eliminated, in order to allow everyone a fair chance to invest. If the situation changes, we may very well see more foreign firms with U.S. investors, analysts note.
Airspan Networks
Among next week's deals, analysts pick Airspan Networks (ticker: AIRN) to be a hit. However, that's not to say that the deal will turn in a 200% gain. Still, analysts anticipate a strong return from the United Kingdom-based wireless communications firm.
With the assistance of underwriters Credit Suisse First Boston, Deutsche Banc Alex. Brown, Lehman Brothers and U.S. Bancorp Piper Jaffray, Airspan plans to price 5 million shares at a targeted range of $9-$11. It's almost a given that the bankers will increase the projected price of the IPO, due to rumored high demand for the stock.
Formed in 1994 as a division of DSC Communications and now part of the Alcatel family, Airspan manufacturers wireless communication systems that help accelerate voice and data networking features. The product is based on the Code Division Multiple Access, or CDMA, language.
One Concern
One concern analysts have is company estimates that project that it will continue to experience negative cash flow for the foreseeable future:
"We have generated significant net losses and negative cash flow since our formation," Airspan said in its S-1 statement with the Securities and Exchange Commission. The company expects to yield negative cash flow for the next 36 months.
On the other hand, Airspan derives 42% of its sales from clientele in Europe.
Still, despite the cash flow projection, analysts are confident that with noteworthy investors Oak Investment Partners and DB Overseas Holdings on board, Airspan should turn in a respectable return when it debuts next week.
By the way, DB Overseas is a unit of Deutsche Bank AG, which paved the way for Deutsche Banc Alex. Brown to become a co-manager on the $50 million deal.
Kleiner Perkins Invests
Next, the trusted name of venture capital delight Kleiner Perkins Caufield Byers offers substantive evidence that Corio (ticker: CRIO), a San Carlos, Calif.-based application service provider, could be another deal that achieves a solid return.
Further, Norwest Venture Partners, an investor that has enjoyed success with many of its privately held stocks, also is involved with Corio. Norwest, a seasoned venture capital house, is a minor investor and will hold onto an 8.6% stake, while Kleiner maintains 23.5% of the firm.
Underwriters, led by Goldman, Sachs, plan to price 10 million shares at $11-$13 next Thursday. Along with Goldman are co-managers Merrill Lynch, Robertson Stephens and Epoch Partners.
Corio provides hosting services with software from PeopleSoft (ticker: PSFT) and Siebel Systems (ticker: SEBL).
Analysts say that when one combines the sizeable position held by Kleiner with the market Corio operates, the end result should be a strong entrance Corio.
Other Debuts
While analysts are keen on the above referenced deals, there are other IPOs to watch out for, including: ClearWave (ticker: CLRW), a wireless telecom play from Romania.
Set to debut next week through co-lead managers Bear, Stearns and Schroder Salomon Smith Barney, the company is scheduled to price 10.6 million ordinary shares at a targeted range of $17.50-$20.50.
Monday Preview
On Monday, IPO.com will take a look back at what has been a delightful week for the new issue arena.
Jeffrey R. Hirschkorn is Senior Market Analyst at IPO.com |
