Alien's Creepy IPO Ride

Savvy IPO sales techniques usually work on investors, especially those eager to get their hands on shares of the latest new thing.

But in the case of Alien Technology, the manufacturer of radio frequency identification systems, the bankers couldn't put enough lipstick on the pig to save the company's initial public offering from being pulled last Friday.

To be sure, the Alien Tech IPO began with a couple of strikes against it. The Morgan Hill, Calif.-based company decided to go public just as the environment for IPOs began to sour on Wall Street. It didn't help that Alien Tech has never turned a profit in its brief history.

But sources say the clincher was investor unease about the company's CFO Robert Eulau, who came to Alien Tech this past spring from Rambus(RMBS Quote), a company that's caught up in the options-backdating scandal.

In a more ebullient market, investors might be willing to overlook such a blemish, figuring it has little bearing on a company's prospects. But with the IPO market on shaky ground, any kind of wart involving a top corporate executive can be the kind of risk that gives investors reason to pause.

"In a good bullish market, bad news or problematic news is much easier to absorb. Clearly, in a rougher market, there is a lot more scrutiny," says Jay Suskind, head of institutional equity trading with Ryan Beck. "Even good news is not appreciated fully. It's all the psychology of the marketplace."

Alien Tech declined to comment.

Alien Tech designs, manufactures and sells radio frequency identification products. It first filed to go public in April. The company's technology helps businesses keep tabs on their operations and products as they are sent out into the marketplace and shipped from one place to another. The company has clients in all types of industries, such as retail, transportation and defense.