IPO VIEW - New offerings market sluggish next week
NEW YORK, June 24 (Reuters) - A mix of technology,
transport and retail companies are on offer in a still-moribund
market for initial public offerings this week, all with one
thing in common: sales and profit.
The new emphasis on financial performance is a sharp
contrast to last year's technology-crazed IPO market, where
losses were evidence of company growth prospects. But analysts
said these seasoned companies aren't likely to disappoint - at
least not like last year's crop of "dotbombs."
"Nasdaq is stabilizing itself and that's a barometer for
the IPO market," said John Fitzgibbon, editor of
IPODesktop.com, an on-line IPO evaluation service. "We've gone
from insanity.com to Graham and Dodd," he added, referring to
the standard business school textbook.
Still, it hasn't been easy to launch an IPO. Some 120 IPOs
have been pulled in 2001, according to IPO.com, a market
research firm. Analysts say that's mostly the result of
investor distaste for risky technology bets with no profits and
sales that may be far off. The crop of three companies planning
to go out next week don't fit that bill.
On offer this week are American Eagle Tankers Inc., an oil
shipping company hoping to raise $125 million; Monolithic
System Technology Inc., a semiconductor company aiming to raise
$50 million; and Galyan's Trading Co., a retailer looking to
raise about $123 million.
American Eagle, incorporated in Bermuda but based in New
Jersey, is aiming to sell 6.75 million shares at $17.50 to
$19.50 each. It's IPO is the latest in a series of energy
related companies to go public and the third crude oil
transportation company to go public in the last several months.
The aftermarket performance for the first two, Stelmar
Shipping <SJH.N>, a Greek company, and General Maritime Corp.
<GMR.N>, based in New York, has been mixed, so American Eagle
is anything but a sure shot for solid aftermarket gains based
on this limited criterion. General Maritime is down 24 percent
from its offering price of $18 on June 11, while Stelmar has
gained 34 percent from its offering price of $12 on March 6.
Still, the company has the benefit of solid net earnings of
$61.6 million and sales of $271.9 million in 2000, according
to its prospectus. And it claims "one of the youngest tanker
fleets in the world," most of which are double-hulled, a hot
sell in these days of environmental catastrophes that
periodically afflict the oil tanker industry.
The American Eagle offering is slated to go out on the New
York Stock Exchange under the trading symbol AEH, sponsored by
Salomon Smith Barney.
Galyan's Trading Co., which operates a chain of 21 sporting
good stores in the Midwest, could face more challenges in its
IPO with state of the highly competitive retail market where at
least one big chain, Montgomery Wards, has bellied up this
year.
The company, in its prospectus, admitted as much, saying it
faces competition from businesses such as catalog retailers,
other chains, Internet retailers and others in the retail
sporting goods market. And its profit margins reflect this:
Galyan's reported a scant $363,000 in net earnings on sales of
$421 million in 2000, according to its prospectus.
Galyan's, which will use the proceeds of the offering to
pay debt and expand, plans to trade on Nasdaq under the symbol
GLYN in the offering led by Goldman Sachs and Salomon Smith
Barney.
Finally, Monolithic System Technology, which develops
memory technology for the semiconductor and electronics
business, plans to sell some 5 million shares at between $9 and
$11 through underwriters A.G. Edwards & Sons and Needham & Co.
The Sunnyvale, California company reported sales of $15.3
million and net income of $142,000 in 1999.
((Dane Hamilton, Wall St. desk (646) 223-6161
dane.hamilton@reuters.com))
REUTERS
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