IPO VIEW-Late September seen testing IPO market
Reuters Story - September 13, 1998 18:45
By Holly Rosenkrantz
NEW YORK, Sept 13 (Reuters) - The gyrating stock market has wiped out demand for new stocks, but plenty of companies are
still planning initial public offerings in the coming months.
Companies are cautiously looking to late September as the time to come to the IPO market with their deals, even though the
global concerns that have shaken Wall Street are expected to continue for months.
And after a lull in filings with the Securities & Exchange Commission in recent weeks, four companies announced plans with the
SEC to go public, indicating glimmers of hope that investors will look again at new issues.
But since investors are seen as too scared to bet on most new stocks, only the most solid of deals in the IPO pipeline are expected
to make it to market later in the month.
"The few highlights will stand above the market on their individual merits," said John Fitzbiggon, editor of the IPO Reporter
newsletter.
Two Internet-related offerings, eBay Inc. and Healtheon Corp. , are seen as the deals that will test the resolve of IPO investors.
"The Internet is relatively immune from global weaknesses," said Kathleen Smith, portfolio manager at the Renaissance IPO
Fund.
There are eight Internet-related companies that have indicated they plan to go public in late September, so why do analysts see
eBay and Healtheon as the best prospects?
While it is common for Internet companies to state in their IPO prospectuses that they don't expect profits in the foreseeable
future, eBay is an Internet company that makes money.
The company also is seen has having a unique niche on the Internet. It runs online auction marketplace, where buyers and sellers
deal with each other directly for goods such as antiques, coins, collectibles, computers, stamps, toys and other items.
Meanwhile, Healtheon, which offers health benefits and services over the Internet, has Silicon Valley celebrity status behind it,
analysts said.
Its board includes chairman James Clark, a co-founder of Netscape Communications Corp. and William McGuire, the chairman of
United HealthCare Corp..
Unlike eBay, though, Healtheon is clear about its lack of earnings. "There can be no assurances that the company will ever
achieve significant revenue or profitability," it declares in its prospectus.
But even if investors ultimately decide to bet on these two companies, analysts stress that it is not a sign that they will revive their
enthusiasm for new Internet-related stocks -- an enthusiasm that has inspired scores of tech start-ups to plan IPOs.
Indeed, most of these offerings are expected to never make it to market.
"There's going to be very few people in the mood to buy any kind of IPOs as long as the stock market stays down," said Steve
Zenker, portfolio manager at McCabe Capital Partners.
"A lot of managers are feeling there's more opportunities other places, with their favorite stocks down 20 percent," he said. "Why
take a chance on a company that has no earnings when there's all these better opportunities out there?" |
