Wall St. in Withdrawal; IPOs Weeks Away
By Emma-Kate Symons
NEW YORK (Reuters) - More withdrawn offerings should mark this week in public listings, with a jump-start to the still-dormant IPO market not expected for weeks.
Market watchers said the flow of companies tapping the stock market for capital will not begin in earnest until February, at the earliest, or perhaps not until the second half of the year.
No offerings are scheduled for this week, although Kabira Technologies, biotechnology firm Ribapharm, and ATP Oil and Gas should debut sometime this month.
Amid a slump in stocks, and the slowing of the U.S. economy, the stalling of the IPO market is starting to hurt Wall St. investment houses, which raked in billions of dollars in underwriting fees in 2000.
``Nasdaq needs to rise above 3000 again to give the IPO market the foundation for a recovery,'' Thomson Financial Securities' Richard Peterson said. ``And we're not going to see a flow (of offerings) until early to mid-February depending on if there's stability or recovery in the market.''
The Nasdaq composite index, a barometer of the tech-dominated IPO market, fell 14.07 to 2626.50 on Friday.
Nasdaq still ended 218.85 points higher for the week, after four straight weeks of declines. The weekly gain came even as computer giants Hewlett-Packard Co. (NYSE:HWP - news), and Gateway Inc. (NYSE:GTW - news) warned of slow sales.
Since November, IPO withdrawals have outpaced filings. Last week, upscale specialty food retailer Dean & DeLuca, Internet portal AltaVista, software maker Haht Commerce and Lineo Inc. which sells Linux technologies, all pulled planned offerings. The reason? Unfavorable market conditions.
``The IPO market for tech and telecom-related issues is in the tank for the foreseeable future,'' said Gail Bronson, a Silicon Valley start-up executive and commentator with IPO Monitor.
``And I wouldn't expect it to come back until after Labor Day -- it's not going to come back until there's very clear stability in the stock market.''
Even the latest economic data, showing the U.S. economy holding up better than expected, did little to revive investor enthusiasm last week.
Retail sales and producer level inflation showed that the economy may still be growing at a decent clip -- dampening hopes that the Federal Reserve will cut interest rates again.
WINTER HIBERNATION NOT HELPING
The standard winter IPO hibernation is also playing a role in the hiatus.
During the flourishing market of early 2000, the first company did not debut until the third week in January, a typically sluggish month for IPOs.
The current slim pickings mean Wall St. must look elsewhere for the fat fees it earned for new stock offerings last year.
According to Thomson Financial figures, last year Wall Street garnered $12 billion in underwriting fees from stocks and bonds, and IPOs were the single largest component, at around $4 billion.
``I don't like to say this, but it's like a heroin addict that needs a fix,'' said Peterson of Thomson Financial.
``IPOs play a large role in underwriting fees, and if they're not maintained at a higher level, Wall Street will be looking for other businesses to make up the loss -- mergers and acquisitions, restructuring, international businesses, higher fees ...''
New offerings that are still on the table could well be scaled back from their original filing prices, given the economic environment, analysts said.
Wall Street is likely to look to multibillion-dollar deals like the Kraft food spinoff from Philip Morris Cos. Inc. (NYSE:MO - news), or the spinoff of Verizon Wireless, a joint venture of Verizon Communications (NYSE:VZ - news) and Britain's Vodafone Group Plc (quote from Yahoo! UK & Ireland: VOD.L; NYSE:VOD - news), analysts said.
``Normally when we get out of this holiday season, there are a slew of IPOs to come out, but I think only a few are going to test the market to start out,'' said George Nichol, an analyst with Morningstar.com (http://www.morningstar.com).
``How warmly they are received will depend on market sentiment toward Nasdaq.''
ca.us.biz.yahoo.com
Hope none of us are holding our breath on this one rebounding -g- ... still, by the time we have our next IPO the stock won't be offered this near cash level, imho ... game for the patient in the meantime ... cheers |
