Big IPO Week Comes at Tense Time
By Denise Duclaux Sep 24 3:02pm ET
NEW YORK (Reuters) - The initial public offering market is poised this week to shatter 1999's record of a whopping $68.7 billion raised by new stock issues -- marking a historic and tense period as Wall Street takes a roller-coaster ride.
The technology-dominated Nasdaq composite index (.IXIC) made a dramatic rebound from an almost 6 percent drop on Friday, after Intel Corp. (INTC.O), the world's No. 1 chip maker, warned of tepid revenue growth and sparked a brutal sell-off in tech stocks.
Meanwhile, shares of Inrange Technologies Corp. (INRG.O) rocketed 189 percent after the maker of switching and networking products made its public debut on the Nasdaq.
``It turned out to be a very surprising and bullish day for the Nasdaq and probably not a bad day for IPOs,'' Christopher Ely, co-manager of Loomis Sayles Small-Cap Growth Fund, said. ''It looks like the market is going to overlook Intel's bad news and not translate it into a broader problem in the market and economy.''
Indeed, Inrange's performance spells good news for the more than 20 companies set to go public this week and expected to help break the $68.7 billion record set last year in
proceeds raised by newly public companies, according to research firm Thomson Financial Securities Data.
But investors are still more selective and will welcome only the solid deals like Inrange with open arms, warn market watchers.
``It's the strong deals -- the strong deals will do the best,'' said Randall Roth, an analyst at Renaissance Capital's IPO Plus Aftermarket Fund (IPOSX.O), who points
out that Inrange is already churning out a profit and is situated in a growing market.
Weaker businesses are still expected to withdraw their planned IPOs in the face of a rocky Nasdaq, where the majority of newly public companies first begin trading. The
Nasdaq is off more than 6 percent for the year.
``I think it just makes the new-issues market more selective,'' Ward Morgenthau, senior vice president of sales at Laidlaw Global Securities, said. ``It's almost like
Darwinism. The weak get killed out there. It will make for a thinner calendar, but make for a healthier one.''
Just last Friday, Adesso Healthcare Technology Services Inc. joined a number of other companies in September that have withdrawn their planned IPOs, blaming general market conditions.
This week, financial information firm WorldFinanceNet.com points to several deals expected to pique Wall Street's interest, including CoSine Communications Inc., which offers computer software and hardware to network service providers; Elastic Networks Inc., which designs high-speed subscriber line communications products; and Ciphergen Biosystems Inc., whose biochips enable researchers to understand diseases.
``The good will come and the good will do well,'' John Fitzgibbon, IPO editor at WorldFinanceNet.com, said. |
