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Technology Stocks : MRV Communications (MRVC) opinions? -- Ignore unavailable to you. Want to Upgrade?

To: signist who wrote (16434)	10/23/1999 3:58:00 PM
From: Stu Bishop	Read Replies (2) \| Respond to of 42804

Hey gang, Wanted to shed some light on the IPO mystique. Sycamore Networks (SCMR) went public yesterday, and the record shows that it rose $146.75, or 386.18%, in its first day. finance.yahoo.com finance.yahoo.com Let's use the analytical minds that I know we have to get at what really happened. Sycamore was "offered" at $38, which tells me that the company and the lead underwriter, Morgan Stanley, decided that this was a "fair value" for the shares. They wouldn't sell the stock for less than they thought it was worth, would they? However, if you tried to buy SCMR on the open market yesterday, do couldn't have bought it for anything close to this. biz.yahoo.com What happened with SCMR was basically a bidding war. Before the market even opened, the "bid" price rose and rose as buyers tried to outbid each other. The "perceived" value for the shares was so great that some individuals were scared to death that they might not have some, and were prepared to pay whatever it took to get it. The result: The first SCMR trade was at $270. From there it quickly fell to the $200 range, and finally closed at $184. To me, a better representation of what took place would be that SCMR fell $86. But the change for the day is computed from the previous close, which was, as a technicality, $38. Since this was the first trading day, there really was no previous close. There was little, if any at all, money made in the "open market" on SCMR shares yesterday. In fact, a lot of people are holding big "paper" losses, and those who sold realized big "real" losses. At $184 SCMR shares are currently priced many times fair value, and it will likely be a long time before anyone should look at SCMR as a smart investment. Check on it in 18 months. Also see Martha Stewart Omnimedia (MSO) for an example of IPO insanity. This one was reported as rising 95% the first day (because the meaningless offer price was $18). But in fact there were only a few minutes after the open that someone could have made a profit with a quick trade. It's now engaged in the long down trend typical of overvalued IPOs. finance.yahoo.com The lesson here is to not take everything you hear or read at face value. Do the analysis. Also, IPO's are over rated. In fact, it appears that IPO's are a way to take advantage of the gullible investor public. Of course, if you can get in before the shares go public, and get it at the "offer price", you're sit'n pretty. Just some random thoughts. Stu B