IPO Pros has the market covered: Sundays: This Week in IPOs Tuesdays: This Week's Secondaries Wednesdays: Upcoming Lockup Expirations Fridays: The Quiet Period

Click here for the latest from Ben Holmes.

For the first time in my career I'm at a point where my expectations for the IPO market are at absolute zero. Closing my eyes and coming to this realization is a pretty strange feeling for me -- totally new. I'm an IPO junkie. I always have been.

Looking back over the past year, it's pretty obvious that we've been in a slide for at least that long. Last March the market began to soften for IPOs and, although there have been a few short periods where it seemed to improve, it hasn't regained the momentum needed to carry a robust new issues market. The Loudcloud (LDCL:Nasdaq - news - boards) deal last week was the ultimate proof of this. Don't worry, I won't be dragging that corpse around any more. What I'm getting at is much bigger than the quality of any one deal.

We've arrived at a point in the market cycle that's as much a bottom as I've ever seen. Most writers throw the term "bottom" around like they have some definition to back it up. I don't. What I do have are two pictures in my head; one of what things are like when the IPO market is rippin' hot, the other of last week. Try to follow me here, I'm going somewhere with this.

When IPOs are "on," when they're really great, it's all about the buyer. Demand drives the IPO market. Supply is simply a response. What's funny, though, is that the firms feeding this demand all operate with the attitude that they're doing their accounts a favor by including them in the deals. Truth is, they are! Think about it, the customers getting product when the machine is hot are being handed free money. But what happens when that demand disappears and the machine throws a rod? Well, sometimes those customers, the very ones who created the demand to begin with, take a back seat to a different set of customers. Confused? Remember who's on the other side of these transactions.

The underwriting firms exist in a weird state of duality -- one side serving their investor customers, the other side their investment banking customers. And, like the phases of the moon, the wants and needs of one seem to go in and out of conflict with those of the other. Taking Loudcloud as an example, you can see that an investment banking customer was placed in the position of preference. Loudcloud needed to complete this public round of financing and the underwriters, the top players in the industry, got the deal done. Did the buyers get hurt? So far, no. The deal was priced at a deep discount to what the company originally wanted and it even traded a fraction above issue for most of its first session. Was this an easy deal? Of course not. It was a tough piece of business to sell and the very fact that it got done is testament to the underwriter's talents.

So, what's got me staring half-lidded at the IPO market? Just this. The new issues game has always been about give and take. The firms give you winners, and once in a few you take a loser. You take the odd loser because you know it'll be made up in spades on the next one. The problem today is that there isn't any "next one." There's not a single name hanging in registration that glows hot with the promise of payback. The way I see it, the buyers of this deal were just asked to do a huge favor by taking it down and there's nothing for the underwriters to give back in return for that favor. This, my friends, is a bottom. This is the end of goodwill and confidence and trust and those are hard to replace. What I've learned from JJC is that only when expectations are at an all-time low, when upside seems all but possible, can things start to improve. It looks as if we've arrived at that point.

Here are this week's IPOs:

NEXTEL INTERNATIONAL
IPO:	(NXTI:Nasdaq)	Provider of integrated digital wireless communications.
Deal size:	60,000,000
Price range:	10.00 - 12.00
Led by:	Goldman Sachs
My take: 2/2/01 -- Shares increased from 45.5 million to 60 million and price reduced from $16-$18 to $10-$12. This is a big one at 60 million shares, but most telecos are. Nextel International is a wireless operator in Latin America, doing business primarily in Brazil, Mexico, Argentina and Peru. Right up front the company tells us they "have licenses in markets that cover about 232 million people." They then tell us they have "a total of about 783,200 digital handsets in service" as of year-end 2000. You should see right away that there's a huge opportunity for Nextel. Or is there? Understand that in the markets they serve a very large part of the population is poor and a vast number of those people have never made a single telephone call in their lives. Build-outs like this are an expensive proposition and, in underindustrialized regions, represent a significant risk to equity investors. As of Dec. 31, 2000, the company had accumulated about $2.519 billion of outstanding long-term debt. The company expects to add to this as they continue to expand. Revenues for the 2000 year ran $330 million vs. a net loss of $478 million. Revenues more than doubled over 1999. During the last months of 2000, you'll remember that there were a number of international telecom IPOs printed. Most of these were in Europe, and most traded down. Given the current environment, we have fairly low expectations for deals of this type. Our immediate estimate is flat with a possible, although unlikely, small premium. Looking forward three to six months we believe it would take a significant boost in confidence in Latin American markets to lift this issue.

QK HEALTHCARE INC
IPO:	(KRX:NYSE)	A national wholesale distributor of selected health care products to retailers, wholesale distributors and pharmacy benefit managers.
Deal size:	11,000,000
Price range:	14.00 - 16.00
Led by:	Lehman Brothers
My take: 1/26/01 -- Price reduced from $14-$16 to $13-$17 and shares reduced from 13.4 million to 11 million . 2/1/00 -- Shares reduced from 15 million. The company operates as a wholesale distributor and supplier of pharmaceutical and hospital/surgical products. Their strategy is to take advantage of temporary margin increases by buying product through price incentive programs and in anticipation of price increases. This seems to work for them. From the filing: "From fiscal 1996 through fiscal 2000, our annual net sales grew from $328.3 million to $1,242.1 million, representing a compound annual growth rate of 40%. Our income from operations grew over this period from $4.6 million to $66.1 million, representing a compound annual growth rate of 95%." Wow. Truth is, this is a very clean deal with an amazing history of growth. This is exactly the kind of deal we like to see brought to market and we're expecting a respectable performance both in the immediate sense and going forward.