IPO Update : As the song goes, "The Old Gray Mare, She Ain't What She Used to Be." The IPO market could replace the old gray mare in that children's song. The weakness has been evident for some time, but this week was remarkable. Four of seven IPOs that priced this week were below the expected range. In fact, two (and almost three) of those were below an already lowered expectation. In addition to a weak overall market, we believe the timing of these deals a week before a major holiday coupled with them being weak fundamental plays in the first place are why they are performing so poorly. See Briefing.com's calendar of IPOs for details. Also, it's a terrible sign when the institutions are not interested in these deals as they are necessary to buoy the shares in the initial days of trading. We question the timing of these deals on the week before a holiday. Pricing this week raises a red flag in our minds as perhaps they are desperate for cash.....Even the highfliers of a few months ago are getting trashed. From their highs, Corvis (CORV 33 1/2 -5 1/2) is down 71% , Avici (AVCI 30 5/16 -4 15/16) is down over 80%, CoSine (COSN 14 11/16 -3/8) is down 80% and Storage Networks (STOR 40 3/16 -5 3/16) is down 74%. Our thought on these names is to keep them on your watch list as we would expect them to do very well in a market turn around. If we see a strong 2-3 month Nasdaq, we could see these names doubling easily. Another problem with a weak IPO market is that the underwriters should also have a weak quarter. Be careful holding the brokerage stocks during earnings warning season in mid to late December as we expect a number of firms including the big houses will warn about Q4 earnings as their investment banking revenue should be weak. -- Robert J. Reid, Briefing.com
14:57 ET ******
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