An Extreme day for new issues-Three hot deals plus a whole new kind of IPO
David:
Looks like TURF will be the winner most likely.
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IPO Daily Report
By Darren Chervitz, CBS MarketWatch
Last Update: 11:49 AM ET Apr 9, 1999 Net Stocks
Internet Daily
NEW YORK (CBS.MW) -- In the land of new issues, it doesn't get much better than this.
Three high-tech companies -- ITurf, USInternetworking and Extreme Networks -- are set to close out the week in IPOs with a bang. In addition, a whole new kind of public offering will be launched with the debut of California's Ravenswood Winery.
"A big day," said Kathleen Smith, portfolio manager at Renaissance Capital's IPO Fund. "It's a little bit hard not to like any of these deals."
However, Smith added that all of the deals -- aside from Ravenswood -- have been priced at "really expensive" levels.
They've also been priced at levels much higher than the companies originally estimated. ITurf (turf: news, msgs), for instance, priced its 4.2 million-share offering at $22 a share, well above the $10 to $12 range listed in the company's earlier IPO filings. The number of shares in the deal was also raised.
USInternetworking (usix: news, msgs), meanwhile, was able to price 6 million shares at $21. That compares with original plans for a 5 million-share offering at $11 to $13. And Extreme Networks (extr: news, msgs) upped the terms of its IPO to 7 million shares at $17 from initial plans of a 5 million-share deal at $9 to $11.
While Smith said ITurf, whose sites target boys and girls ages 10 to 24, will likely attract the most attention due to heavy interest from retail investors, USInternetworking could have the most unique business model. The company hosts enterprise software applications, such as PeopleSoft's human-resources products, on its own servers and allows corporate customers to use the products remotely.
"It's kind of like Exodus in that it's a business enabling customers to rely on a third party, in this case for enterprise software programs," Smith said. Exodus Communications (exd: news, msgs) allows customers to outsource Web-site management.
USInternetworking operates its own data network to bypass congested parts of the Internet, but the company admits that the growth of Internet-based software solutions could be hampered by an "inadequate network infrastructure for the entire Internet."
Extreme Networks is a more typical data networker, but its high-speed switching product is in great demand. "Based upon the top-line growth that we've seen already, it's a very hot product," Smith said.
Compared with the other three companies going public, the Ravenswood Winery (rvwd: news, msgs) deal seems rather tame. The Sonoma, Calif.-based company sold 1 million shares at $10.50 each, at the low end of the original range. Just before noon Eastern time, shares of Ravenswood were changing hands at 10 3/4.
However, the importance of that deal should not be underestimated. Ravenswood is the first company to test out the Dutch-auction-based OpenIPO process created by the new investment bank W.R. Hambrecht & Co.
With OpenIPO, the offering price is determined by investors, not the underwriter. For the past couple of months, investors have been submitting bids to buy a given number of the million shares being sold by Ravenswood. The $10.50 price was determined by tallying all the bids and figuring the highest price at which there was demand for the 1 million shares.
In theory, the OpenIPO process -- which allows small investors to bid for a deal right alongside big institutions -- should come up with an offering price that comes much closer to approximating the actual demand for the stock.
Smith said she thinks the offering price for Ravenswood is fair. "It will be real interesting to watch how this company trades. Where will it close, and how much volume will there be?" Smith said. "This is a whole new process, so you can be sure they'll make this (first) deal work."
Officials at W.R. Hambrecht could not be reached for comment
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