Google IPO an Unlikely Lifeline for Technology

The reason for the discounting is because "there's a lot of inventory out there. Plus the market has been going sideways," said Richard Peterson, a market strategist for Thomson who focuses on IPOs, and mergers and acquisitions.

The large inventory means investors can pick and choose which IPOs they want to participate in. "We're looking for companies that are profitable or very close to being there, in a defensible niche," Holman said.

"A lot of these companies that we're looking at, while they've improved dramatically over what we saw in the late '90s in terms of the quality and where they're at in their life cycle, they're just not as compelling as some of the things that are more seasoned in the marketplace," Holman said. "I think that's why they're struggling a bit."

In addition, the majority of IPOs this year haven't exactly fared well. More than half are now trading lower than their offering price, losing on average 3.5% this year, according to Thomson.

And in yet another sign of the IPO market's health taking a turn for the worse, seven companies withdrew or postponed their offerings last week, according to Thomson. One of those companies, Nanosys, an early-stage nanotech company that proposed raising roughly $100 million, cited "the volatility of the public capital markets" for its withdrawal.

Unfortunately, One of a Kind

Google, of course, stands out for its broad brand awareness, impressive top line (at $961.9 million in 2003) and strong profits, at $105.6 million. For those reasons alone, Google is an anomaly, and consequently its IPO performance isn't expected to be a catalyst for other tech stocks, IPO watchers say.

"I don't know whether you're going to have heavy coattails," said Sal Morreale, who tracks IPOs for Cantor Fitzgerald in Los Angeles. "Wall Street is more concerned with [each individual company's] balance sheets, good management."