High-Growth Tech Companies Find IPO World Pleasing

The strong reception for AirNet and some other recent IPOs is proving encouraging for many companies on the verge of going public.
Author:
Publish date:

Two new triplets emerged in the IPO world on Tuesday.

Shares of

AirNet Communications

(ANCC)

, which makes wireless products, virtually tripled in their first day of trading.

And

FreeMarkets

, an online business-to-business auctioneer, nearly tripled the expected price range of its initial public offering.

Together, they point to the continuing high enthusiasm among investors for new issues in high-growth digital fields.

Indeed, the strong reception for AirNet and some other recent IPOs is proving encouraging for many companies on the verge of going public.

For example, another technology company,

VA Linux Systems

, doubled its expected offering range Tuesday, following the lead of

Agency.com

last week.

"They saw more market demand," said Gail Bronson, a Silicon Valley startup strategist at

IPO Monitor

, a Web site devoted to analyzing and tracking IPOs. "Clearly, the broader market is buoyant enough to support these kinds of prices. They also look at the market and the comparable IPOs to set prices."

FreeMarkets, VA Linux and Agency.com are all expected to begin trading this week. By sharply raising their anticipated offering prices, the companies are trying to take advantage of an opportunity to raise more money for their businesses, rather than leaving the biggest piece of the one-day gains for investors in the IPOs.

AirNet, for example, could have raised considerably more money if it had priced its stock more aggressively. The company's shares soared 27 1/16, or 194%, to close at 41 1/16 after trading as high as 45 Tuesday.

AirNet offered 5.5 million shares at 14, raising $77 million. Yet those shares were valued at $225.8 million at the close of trading on Tuesday, a one-day gain of nearly $149 million.

"AirNet is probably riding the wave of year-end euphoria," Bronson of IPO Monitor said. "You're seeing a lot of new companies sprint forward as fast as they can build their technology out."

AirNet, which is based in Melbourne, Fla., provides wireless base stations and other telecommunications equipment designed to offer cost-effective, simultaneous wireless high-speed Internet and voice services to mobile subscribers.

AirNet's broadband

AdaptaCell

base transceiver station takes its commands from software, so that software controls the way the equipment encodes and decodes radio waves. This allows networks to upgrade to accommodate data traffic or the introduction of technology at a lower cost.

"Timing always has a lot to do with an Internet or telecom IPO," Bronson said. "This industry is in vogue."

This offering is born into a sector that has been both growing fast and consolidating almost as quickly.

For example, at an analyst meeting last Thursday and Friday in Texas, "

Nokia

(NOK) - Get Report

had extremely bullish things to say about wireless and wireless data and guided analysts to raise their estimates for the sector," said Brantley Thompson, a telecommunications research analyst at

J.P. Morgan

.

The lead investment firms managing AirNet's IPO --

Salomon Smith Barney

,

Hambrecht & Quist

and

Volpe, Brown, Whelan

-- had set the offering price at $14, above the expected range of $11 to $13.

Meanwhile, FreeMarkets raised the expected price range to $40 to $42 from $14 to $16 for an offering of 3.6 million share. At those levels, the company, which is based in Pittsburgh, could expect to raise $144 million to $151 million.

FreeMarkets operates real-time, business-to-business online auctions for companies buying custom industrial components, chemicals, and commodities such as coal and steel.

The lead underwriter of its IPO is

Goldman Sachs

.

And VA Linux doubled its expected price range to $21 to $23 a share from $11 to $13 for an offering of 4.4 million shares. At those prices, the Sunnyvale, Calif.-based company could expect to raise $92 million to $101 million. VA Linux provides large-scale computer servers and workstations specially designed for the Linux operating system.

The lead underwriter is

Credit Suisse First Boston

.

Last week, Agency.com, an Internet strategy and advertising company, raised is expected price to $22 to $24 from $10 to $12 for an offering of 5.9 million shares. As such, the company expects to raise $129.8 million to $141.6 million. The lead underwriters are Goldman Sachs and Salomon Smith Barney.