Happy Days Here Again For Technology Company IPOs
investors.com
Posted 8/14/2007
The stock market has been in turmoil of late, but the IPO window for software companies is open wider than it has been since the bubble year of 2000.
With VMWare's big initial public offering, six software companies already have gone public this year, and analysts expect that number to perhaps double by year's end.
Last year, seven software companies went public, says the National Venture Capital Association/Thomson Financial. From 2001 through 2005, no more than five — and as few as three — software companies made their IPOs.
In addition, a number of tech services companies have gone public this year. The IPO trend is nothing like in 2000, when Thomson counted 50 software IPOs. But the bursting of the tech bubble made investors wary, forcing software makers to develop much more stable business plans before selling stock to the public, says Mark Heesen, president of the NVCA.
"Now we're seeing some solid companies going public, with real revenues and an ability to withstand the regular interruptions in business cycles that happen so often on Wall Street," Heesen said.
VMWare raised nearly $1 billion in its IPO, another sign of recovery in tech offerings, says Paul Bard, an analyst with research firm Renaissance Capital, which runs the Web site IPOhome.com.
"We've started to see a recovery in 2006," Bard said. "And now with all the problems around subprime lending, investors see the tech sector as more attractive" than some others.
"We expect to see 10 or more software IPOs this year," Bard said.
A total of 148 IPOs, tech and otherwise, were priced in the U.S. as of Aug. 10, up from 103 in the year-earlier span, according to IPOhome.com.
Some investors say VMWare is the most anticipated tech IPO in two or three years. (See story, A1.) It's a unit of EMC (EMC) that's focused on virtualization. This is a type of software that maximizes the spare computing power of corporate servers.
Last week, VMWare underwriters raised the expected IPO's price range to $27 to $29 per share from $23 to $25, and the stock was priced right at the top of that range, $29. The stock trades under the ticker of VMW. EMC owns 87% of the company. |
