If its the internet it has to go -
THE GOOD TIMES ARE HERE AGAIN FOR IPO MARKET
By JAMES B. KELLEHER
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They're back.
Investors are stampeding back into the risky market for initial public offerings, encouraged by Wall Street's recent rebound and the IPO market's enduring reputation as a place where lucky gamblers hit the jackpot.
That allure hardly suffered last week when theglobe.com, an Internet company that was forced to postpone its IPO in October because of the market downturn, shot into orbit on its rescheduled debut.
Priced at $9 Thursday night, shares in theglobe.com rocketed as high as $97 in Friday trading - the largest one-day gain ever by an IPO.
What we're seeing is a recovery in the IPO market, said William Smith, the president of Renaissance Capital in Greenwich, Conn., and the manager of an IPO-focused mutual fund.
A type of buyer that was absent from the IPO market these past few months is back ... People were a little more risk-averse, a little less willing to take a chance with some unproven name. That's changed.
Last week was the busiest for the IPO market since late July, when the dramatic correction on Wall Street choked off demand for new shares and forced dozens of companies, including Goldman Sachs, to postpone or withdraw their IPOs.
And experts say IPO offerings, and the frenzy in the aftermarket, will only intensify in the coming days as companies that scrubbed IPOs because of the downturn rush to market.
Among the names expected to price in the coming days are Plains All American Pipeline, MegaBank Financial and Internet America.
Market conditions have changed dramatically since Veterans Day, John Fitzgibbon, the editor of The IPO Reporter, told The Post.
You can expect a lot more companies to come out of the woodwork now. We got an IPO market again.
But experts say investors are interested in just two kinds of IPOs for now: brand names they can bank on , like Conoco (a gas and oil exploration company) and MONY (a life insurance company), and the usual assortment of Internet-related longshots.
Other kinds of companies can go begging.
In last week's biggest offering, Fox Entertainment Group, the giant TV and film subsidiary of News Corp., the parent company of The Post, raised more than $2.8 billion - the third-largest IPO in U.S. history.
But the Fox IPO was quickly overshadowed by the dramatic debut of theglobe.com, an Internet site that offers customers a range of services, including free home pages and e-mail.
theglobe.com joined a handful of other IPOs, including eBay, EarthWeb and Broadcast.com, which doubled, tripled - or in the case of theglobe.com, jumped tenfold at one point - in value in first-day trading. theglobe.com closed at 63.
Those exceptional performances have burnished the IPO market's reputation as a gold mine. But for every theglobe.com, experts point out, there are two companies like Adams Golf, which has plunged as much as 70 percent since its debut in July.
So why are investors excited about this market again? A big factor has been the recovery on Wall Street.
Most of the IPOs - about 75 percent - are traded on Nasdaq, Fitzgibbon explained, and you've had the wind at the back of the Nasdaq Composite for about five weeks now.
Ironically, Goldman's announcement in September that it was postponing its own high-profile IPO may have helped the market regain its footing, some IPO watchers say.
The reasoning? Though Goldman scrapped the IPO for now, it was committed to finishing it by the middle of 1999.
When they said that, Renaissance Capital's Smith said, it was clear they thought the market was coming back.
Another factor in the turnaround, particularly for Internet shares, was the phenomenal success of eBay, a (rare) profitable Internet company that has risen more than 350 percent since its September debut and created what Tom Taulli, an analyst at Silicon Investorin Newport Beach, Calif., calls an Internet investment mania.
A lot of investors think, "IPO, Internet - it's gotta go up,' Taulli told The Post. That's the level of the analysis they're doing. This could be a dangerous market. I'd be careful.
All this activity is good news for firms like Merrill Lynch, Morgan Stanley and Goldman, which make big bucks orchestrating the deals. And it should be good news for corporate America, which relies on the market to raise money to pay debt and fund expansions.
But it is mixed news for investors. Of the 100 most recent IPOs listed in the Nov. 9 issue of The IPO Reporter, 62 lost value since their debut.
The aftermarket performance is the real story, said Dick Smith, head of the equity syndicate desk at NationsBanc Montgomery Securities in San Francisco. And, by and large, that performance has been pretty abysmal.
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