When things look like they'll never end, they are about to.
I wrote that back on May 3, 1999. Boy, was I early.
Who could have known that it would be almost a full year later that we would see our first real signs of a slowdown in the IPO market. Back then it was easy for me to be a little guarded about my hopes for a prolonged bull market for IPOs. By that time we had been rocking steadily for almost seven months and I was long past beginning to anticipate
The End. Right now, today, it would be very easy for any one of us to assume that the IPO party is over. So, what if it is?
 | | Ben Holmes has the market covered: | Sundays:
This Week in IPOs
Tuesdays:
This Week's Secondaries
Wednesdays:
Upcoming Lockup Expirations
Fridays:
The Quiet Period
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This has been the longest run in the IPO market that I, or anyone I know, has ever seen. Who among us would have a legitimate beef if it shut down for a while? Anybody who has been involved in any meaningful way in the deals over the last, what,
16 months, has made plenty of dough. Yup, we've grown fat at the trough.
But what if it's
not over? What if what we're seeing is just the same shift toward quality that is taking place in the broader market? If that's true, then we may still have plenty of deal flow to graze on. Take a close look at the offerings that are expected to price this week and note those where I have highlighted things such as profitability. These are the deals that will win the "IPO Beauty Contest," the one where fund managers who are under pressure to justify their positions are the judges. These are where I would put my money if I were involved.
Always the recycler, I'll leave you with another chunk of evergreen advice from my May '99 column:
"This is not the way it usually is. This will end someday, and when it does, any multipoint premium will look pretty darned good! My advice? Trade like it could all end tomorrow, because it just might." Now go whip 'em and drive 'em.
| 360 NETWORKS |
| IPO: | (TSIX:OTC) | Independent, facilities-based international provider of fiber-optic communications network products and services. |
| Deal size: | 46,000,000 |
| Price range: | 16.00 - 18.00 |
| Led by: | Goldman Sachs |
| My take: These people are building a big fiber-optic network. These deals have worked well recently, but things have obviously changed. Big revenues and profitable. This is a big piece of stock and the market may not be able to swallow it all. |
| ACTIVEWORLDS COM INC |
| IPO: | (AWLD:OTC SC) | Provider of Internet software products and services. |
| Deal size: | 1,200,000 |
| Price range: | 5.00 |
| Led by: | HD Brous & Co. |
| My take: No-name underwriters and a cheap share price. No thanks. 1 unit = 1 share of common + 1 series B redeemable common stock. Trades on the OTC Bulletin Board under AWLD. |
| ALTAVISTA |
| IPO: | (ALTA:OTC) | An Internet search, new media and commerce network that delivers personalized, relevant information and e-commerce services to users worldwide. |
| Deal size: | 14,800,000 |
| Price range: | 18.00 - 20.00 |
| Led by: | Morgan Stanley Dean Witter |
| My take: Altavista has huge name cache and brand strength. The market probably will not value this like a Yahoo! (YHOO Quote) or Lycos(LCOS Quote), but I do expect a warm reception. |
| BIRCH TELECOM INC |
| IPO: | (BRCH:OTC) | Integrated communications provider. |
| Deal size: | 12,500,000 |
| Price range: | 15.00 - 17.00 |
| Led by: | Lehman Brothers |
| My take: Kravis is the major shareholder. Revenues are growing dramatically, but losses are matching this trend. Plenty of underwriters to aid in marketing this CLEC. I'd say a small premium at best. |
| BUSYBOX COM INC |
| IPO: | (BUSY:OTC SC) | Busybox designs, develops, maintains, services, markets, sells and distributes digital imagery. |
| Deal size: | 2,000,000 |
| Price range: | 5.125 |
| Led by: | Barron Chase |
| My take: Unit deal -- each unit = 1 share common + 1 wt. I hate low-priced deals. Enough said. |
| CAMTEK |
| IPO: | (CAMT:OTC) | No description available. |
| Deal size: | 2,800,000 |
| Price range: | 13.50 - 15.50 |
| Led by: | CIBC World Markets |
| My take: 4/11/2000 reduced from 16.00 - 18.00. Non-EDGAR filing. I have almost no info on this deal and currently I'm voicing no opinion. This deal is dragging from week to week and I'm starting to wonder why. |
| COOLSAVINGS COM INC |
| IPO: | (CSAV:OTC) | Provider of a comprehensive set of e-marketing services used by online and offline advertisers to build one-to-one customer relationships |
| Deal size: | 4,200,000 |
| Price range: | 11.00 - 13.00 |
| Led by: | Chase H&Q |
| My take: Explosive revenue growth and some pretty strong comps. With the market willing, I'd call it a small premium deal. |
| DIGITALWORK COM |
| IPO: | (DWRK:OTC) | Provider of Web-based business services to the small business market. |
| Deal size: | 6,250,000 |
| Price range: | 11.00 - 13.00 |
| Led by: | Lehman Brothers |
| My take: Suddenly improving revenues, but a worsening bottom line. Draper is involved (for what that's worth) and I trust these underwriters. What I don't know is how the market will take to B2B IPOs this week. I'll venture a premium of a couple of bucks. |
| EMBARCADERO TECHNOLOGIES INC |
| IPO: | (EMBT:OTC) | Provider of software products that enable organizations to build and manage e-business applications and their underlying databases. |
| Deal size: | 4,000,000 |
| Price range: | 11.00 - 13.00 |
| Led by: | Donaldson Lufkin & Jenrette |
| My take: This one works in any market: e-Biz software deals are still a group with high interest. This one is fundamentally sound and is profitable. Bring it on, but I would wait for a better environment where it would be a huge performer. |
| GENOMIC SOLUTIONS INC |
| IPO: | (GNSL:OTC) | Designs, develops, manufactures, markets and sells genomic and proteomic instrumentation, software, consumables and services. |
| Deal size: | 5,000,000 |
| Price range: | 17.00 - 19.00 |
| Led by: | Warburg Dillon Read |
| My take: 3/27/2000 price increased from 16.00 - 18.00. This issue is callable for a period of two years beginning 181 days after the offering. I cannot recommend biotechs in here. |
| INVENTA TECHNOLOGIES |
| IPO: | (INVA:OTC) | Internet professional services firm providing business-to-business e-commerce solutions to Global 2000 companies. |
| Deal size: | 3,500,000 |
| Price range: | 11.00 |
| Led by: | Lehman Brothers |
| My take: Just like the Internet brand/image-building firms, these technology consultant firms are much needed; the problem is in the balance sheet. Revenues are ramping nicely, but losses are huge. This is not the market for a deal like this. |
| ONESOFT CORP |
| IPO: | (ONSF:OTC) | Developer and provider of Internet commerce application software and services. |
| Deal size: | 4,500,000 |
| Price range: | 12.00 - 14.00 |
| Led by: | Deutsche Alex. Brown |
| My take: 3/15/00 price increased from 11.00 - 13.00. Financials are not as pretty as some, but the deal has a shot at working, based on the interest in the group and the strength of the underwriters. Remember, I said a shot. |
| PACKARD BIOSCIENCE |
| IPO: | (PBSC:OTC) | Developer, manufacturer and marketer of instruments and related consumables and services for use in the life sciences research and nuclear industries. |
| Deal size: | 12,000,000 |
| Price range: | 16.00 - 18.00 |
| Led by: | Merrill Lynch |
| My take: Think picks and shovels. Biotech is a huge industry and these guys are selling them tools and supplies. Huge revenues and just a hair south of break-even. Remember, research goes on even if the market hates biotechs. |
| PARADIGM GENETICS INC |
| IPO: | (PDGM:OTC) | Industrializing the process of determining gene function to generate information that will enable us to develop novel products in four major sectors of the global economy. |
| Deal size: | 5,000,000 |
| Price range: | 14.00 - 16.00 |
| Led by: | Chase H&Q |
| My take: I don't even want to talk about biotechs in here. I doubt this will price this week. |
| PEC SOLUTIONS INC |
| IPO: | (PECS:OTC) | Provider of professional technology services that enable government entities to harness the power of the Internet and other advanced technologies. |
| Deal size: | 5,000,000 |
| Price range: | 10.00 - 12.00 |
| Led by: | Donaldson Lufkin & Jenrette |
| My take: 4/13/2000 reduced from 12.00 - 14.00, 7,000,000 shares. Selling shareholders in the initial public round kind of turn me off, but I'll overlook it this time. This is a nice profitable company. |
| QUALSTAR CORP |
| IPO: | (QBAK:OTC) | Designs, develops, manufactures and sells high-quality automated magnetic tape libraries. |
| Deal size: | 3,250,000 |
| Price range: | 10.00 - 12.00 |
| Led by: | First Security Van Kasper |
| My take: Third string underwriters, but strong revenue growth and significant profits. This is a deal that deserves to work big. |
| ROCKFORD CORP |
| IPO: | (ROFO:OTC) | Designs, manufactures and distributes high-performance audio systems. |
| Deal size: | 3,350,000 |
| Price range: | 11.00 - 13.00 |
| Led by: | Dain Rauscher Wessels |
| My take: This deal has been in the deep freeze for some time -- I liked it back then and I like it now. They make great stuff and they make a profit. What more could we ask for? |
| SOFTWARE TECHNOLOGIES CORP |
| IPO: | (STCS:OTC) | Provider of e-business integration software. |
| Deal size: | 6,100,000 |
| Price range: | 16.00 - 18.00 |
| Led by: | Morgan Stanley Dean Witter |
| My take: E-biz software is still a favorite of mine, but this one has a pretty large loss on its sheet to overcome. On any other day, I'd call it up -- now, small premium at best. |
| VIROLOGIC INC |
| IPO: | (VLGC:OTC) | Biotechnology company that develops and markets innovative products to guide and improve the treatment of viral diseases. |
| Deal size: | 5,000,000 |
| Price range: | 14.00 - 16.00 |
| Led by: | CIBC World Markets |
| My take: Here's a drug discovery deal with losses almost 19 times its revenues. In this environment? It doesn't stand a chance. |
| YUPI INTERNET INC |
| IPO: | (YUPI:OTC) | Online Spanish language destination. |
| Deal size: | 7,000,000 |
| Price range: | 13.00 - 15.00 |
| Led by: | Credit Suisse First Boston |
| My take: The comps (Latin America/online) really got sliced last week. I'm guessing they'll postpone. If not, this deal is facing a really difficult launch. |
