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Technology Stocks : E*TRADE IPO Alert - Y2K and Beyond (EGRP) -- Ignore unavailable to you. Want to Upgrade?

To: Bald Man from Mars who wrote (9694)	7/20/2001 8:43:43 AM
From: Patricia Meaney	Respond to of 10270

Internet & Technology Friday, July 20, 2001 Printer-Ready Version IPO Marks Latest Stage In Accenture’s Evolution By J. Bonasia Investor's Business Daily Accenture Ltd., the world’s largest management consulting firm, defied gloomy market trends by raising $1.67 billion in its initial public stock offering Thursday. The Chicago company, formerly Andersen Consulting, sold 115 million shares at $14.50 per share. The deal ranks as the fifth-largest IPO of the year, close behind the $2 billion raised by rival KPMG Consulting Inc. (KCIN) in February. Accenture designs and develops computer systems for corporate clients, so the tech slowdown is likely crimping sales. But the company has strong fundamentals and a long track record. That’s allowed it to go public in a market that’s soured on tech IPOs, analysts say. “This was an exceedingly successful deal when put in the perspective of IPOs this year on the New York Stock Exchange,” said David Menlow, president of IPOfinancial.com, which tracks public offerings. -------------------------------------------------------------------------------- Image: Services Sell -------------------------------------------------------------------------------- The stock closed at 15.17 after its debut Thursday, up about 5% from the initial price. Accenture sold just 12% of company equity, meaning its 2,500 partners still control 88% of the shares. The stock will trade on the New York Stock Exchange under the symbol ACN. The offering allows Accenture partners to gauge the worth of their holdings, Menlow says. And the timing seems right, he adds. An IPO drought this year has left investors thirsting to buy stock in companies with respected names and good growth potential. “Accenture has established itself in a sector that’s not just a passing fad,” Menlow said. “The prospects for growth in (information technology) services are really quite staggering. There’s almost unlimited upside.” Acquisition Tool? The new public stock also gives Accenture a tool to acquire other businesses without spending cash. “They can use this as an acquisition currency,” he said. “They can use stock to buy another firm in a takeover.” Because Accenture sold only 12% of its equity, it can hold future stock offerings to raise more capital if needed. The company reported more than $11 billion in sales for the 12 months ended May 31. The IPO is “a strong debut” in a tough climate, says Alden Cushman of Kennedy Information Inc., publisher of consulting news. Companies have pared back budgets in the past year, and consulting is often the first item cut. As consulting firms wait out the downturn, Accenture has an edge, Cushman says. The IPO could be a big boost in its fight against closely held rivals such as Deloitte Consulting and PricewaterhouseCoopers. “Now they have quick access to equity,” he said. “This gives them a tool that Deloitte and PwC don’t have.” The stock options will also help retain valuable consulting partners, Cushman says. “This seemed to be the best avenue to keep partners who have worked so hard,” he said. “The goal is to have partners focus on clients and stay put in the firm.” Jeff Hirschkorn, senior IPO analyst with IPO Monitor, says the stock’s first-day gains were muted because so many shares were offered. Still, he thinks investors will be attracted to Accenture’s steady earnings and solid business model. “How this stock will do in the aftermarket is anybody’s guess,” he said. “But even if it falls a bit, this will be a good long-term investment.” Andersen Split Accenture spun off from consulting firm Arthur Andersen in 1989. After years of an uneasy relationship, the two firms entered arbitration for a permanent separation last year. Andersen Consulting lost the right to the Andersen name and re-emerged as Accenture on Jan. 1 this year. The accounting company now calls itself simply Andersen and maintains its own tech consulting division. Another former Big Five consulting firm, KPMG Consulting of McLean, Va., went public in February. It was spun off by parent accounting firm KPMG LLP. The KPMG IPO raised more than $2 billion on an initial price of $18 per share. The stock now trades at about 14, which could be a bad omen for Accenture. But conditions were tough for KPMG because the stock market imploded right after its IPO, says Menlow of IPOfinancial.com. KPMG has more exposure to the weak U.S. economy than Accenture, which has a broader global client base. In June, Accenture said it would cut 600 jobs and offer sabbaticals to 800 others in an effort to trim costs. Some analysts said the cuts were meant to show Wall Street that the firm could be a disciplined public entity. A syndicate of leading investment banks led by Goldman Sachs & Co. (GS) and Morgan Stanley & Co. (MWD) underwrote the IPO.