NEW YORK, June 20 (Reuters) - As investors wait for the
overall stock market and the Internet sector to make up their
mind which way they're moving, the new issues arena finds
itself facing an increasingly tough audience.
Recent concerns about the U.S. interest rate scenario have
taken the U.S. stock and bond markets on a rollercoaster ride
in recent weeks, with soaring Internet stocks taking a hit on
concerns about precarious valuations.
The days when any young company with a connection to the
Net could go public and nab a sharp premium at its debut have
ended, analysts said. Investors are getting choosier every
week.
"More sophisticated investors are holding off (from IPOs).
They want a recognizable name -- something where you can look
at it and foresee positive earnings within three years," said
Peggy Farley, chief executive and president of Ascent Asset
Management Advisory Services.
Until the overall stock market finds a direction and
stabilizes, deals may be postponed, said Steve Tekirian, an
analyst at Standards & Poor's. The number of deals that don't
price on schedule grows each day, and underwriters are more
frequently clipping expected price ranges to get deals done.
"Timing is so key for IPOs. Those who can afford to will
wait. There has been a lot of rejiggering of deals," said
Steven Tuen, an analyst at IPO Value Monitor.
Some companies are pushing the deals up because they see
their window of opportunity closing, while others are trying to
get their issues finished before the July 4 holiday, after
which the summer doldrums set in, Tuen added.
"A lot of deals are coming to (market) that should not.
They are too early, not good enough or are late-comers and that
is where we are seeing the poor receptions," Farley said.
Yet there are exceptions. Many companies that produce
technology for Internet companies, such as Viant Inc. <VIAN.O>
and Goto.com <GOTO.O>, have enjoyed solid performances and
priced at the top of ramped-up price ranges.
"The market isn't dead. There is still life in it. We are
still seeing deals where prices have been increased. The good
quality deals are not having a problem," said Tom Taulli, an
analyst at Edgar Online Inc.
This week's menu of IPOs is meaty and diverse, including a
large offering from a brokerage and several more Internet
services, or infrastructure, companies.
"The no-brainers (for solid debuts) are Ariba, CyberSource,
Globespan Semiconductor, Ramp Networks, Software.com and
Persistence Software," said Vincent Slavin, an analyst at
Cantor Fitzgerald, listing a host of technology IPOs.
Ariba Inc., which plans to offer 4 million shares in a
range of $16 to $18, provides e-commerce solutions for
operating resources such as information technology.
"Infrastructure (deals) versus the consumer-oriented deals,
which tend to be more hype-related, have done well. Anyone can
sell books, toys or financial news on the Web; that's not that
hard. In the long run, the infrastructure guys are going to
make money," Tekirian said.
Software.com, which plans to offer 6 million shares in a a
range of $10 to $12 through lead underwriter Credit Suisse
First Boston, sells software for e-mail systems to Internet
service providers. Cisco Systems <CSCO.O> made an equity
investment in the company last year.
Globespan Semiconductor, which develops advanced digital
subscriber line integrated circuits, is slated to offer 3.25
million shares in a range of $9 to $11. Internet access
provider Ramp Networks is slated to offer 4 million shares in a
range of $10 to $12.
Juniper Networks Inc., which plans to offer 4.8 million
shares in a range of $21 to $23, is seen as another hot deal.
"They are ramping revenues substantially. They have all the
elements in place," Taulli said. "They develop technology for
Internet service providers and these companies are getting
bigger and need more sophisticated technology. Juniper appears
to be a leader inthe area."<b/>
Discount broker TD Waterhouse Group Inc. will offer 20.8
million shares in a range of $20 to $24.
There are also a host of more traditional Internet deals,
including consumer-direct online travel wholesaler
Travelscape.com and Web sites owner internet.com.
REUTERS
Rtr 18:02 06-20-99
Copyright 1999, Reuters News Service
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