"Inktomi soars on debut" -- from CBS MarketWatch
Internet-software IPO only good news for day
By Darren Chervitz, CBS MarketWatch
Last Update: 01:16 PM June 10, 1998
NEW YORK (CBS.MW) -- While most new
issues received lackluster receptions,
Internet-software developer Inktomi screamed
ahead by more than 100 percent on its U.S. stock
market debut Wednesday to highlight the start of
an important and busy week in IPOs.
Inktomi (INKT), whose technology will be the
motor running several major search engines, priced
its 2.26 million share offering at $18 each, at the top end of an estimated
pricing range that had already been increased by lead underwriter
Goldman Sachs. The stock leaped to as high as 38 1/4 in early trading.
With 4.4 million shares already changing hands -- about twice the number
of shares offered in the IPO -- the stock traded at 37 1/4.
Inktomi benefited from some major recent customer wins, including from
Microsoft (MSFT), Yahoo (YHOO) and America Online (AOL), several
of which were announced after the company filed for its IPO. "It was
beautiful what they did. It was so well-orchestrated," said Francis
Gaskins, IPO analyst for Gaskins & Co. "It was like a play. Act I was the
filing. Act II were the contracts they signed, and then Act III was boom
(the IPO)."
The moonshot was a welcome relief for the beleaguered IPO market,
where few deals of late have seen gains of even 10 percent. Still, analysts
warned that the debut doesn't necessarily signify a rejeuvenation of the
IPO market. "This is an isolated event," said John Fitzgibbon, editor of the
IPO Reporter. "All you have to do is take a look at the rest of the
market."
Take, for instance, Wednesday's disappointing spin-offs from U.S. Office
Products (OFISD). The office products distributor split off four of its units
and planned on floating stock offerings to the public for three of the newly
formed companies. However, the IPO from graphic arts service provider
Workflow Management (WORK) was canceled because the company
thought it was worth more than the estimated IPO terms. Although the
new shares weren't sold, the stock started trading anyway and was off 2
to 9.
Meanwhile, the performance of the two IPOs that did get completed was
mixed, with school supply distributor School Specialty (SCHS) up 2.4
percent over a $15.50 offering price that was in the top end of the
expected range and corporate travel agent Navigant International (FLYR)
off 7.7 percent from its lower-than-expected $9 offering price.
Manish Shah, president of IPO Maven, said he
believed School Specialty's stock could be 30
percent higher within six to nine months as it
pursues its roll-up acquisition strategy. "The
problem is margins are so, so low in the business,
it remains to be seen how profitable the company
can be," he said.
The day's other IPOs performed poorly as well.
Commercial printer Master Graphics (MAGR),
for instance, fell 5 percent under its $10 offering
price, hardly a surprise given the cancellation of
the Workflow Management deal.
Financial software developer The InterCept Group (ICPT) priced its
offering below expectations at $7 a share, but the stock had not started
trading by noon.. |
