Updated from 3:08 p.m. EDT


Seagate Technology

, the hard-drive maker that went private in an August 2000 LBO, it might seem like a strange time to go public again.

The hard drive maker, whose owners include private equity giants Silver Lake Partners, Texas Pacific and August Capital, recently registered $1 billion of common stock for an initial public offering, two years after going private in a deal in which the hard-disk operations were purchased for about $875 million in cash and $1 billion in debt (the total value was around $13.7 billion, including Seagate stock holdings that were distributed to shareholders).

The offering, which would be by far the largest tech IPO the year, comes at a dismal time for the new issues market. Since January, only 59 IPOs have come to market, compared to 526 in the IPO bubble of 1999. And, so far, the stocks that have debuted in 2002 are down 15%, on average, year to date.

"This is probably one of the worst times for a company to go public, from the issuers point of view, because value is so low," said David Menlow, president of IPOFinancial.com.

The company or its owners are probably trying to take advantage of its improving prospects, despite the moribund tech market. Seagate said in government filings that its earnings for the quarter ended Sept. 27 rose to $110 million from $34 million a year earlier, while revenue jumped 22% to $1.58 billion.

"We are coming up on the two strongest quarters for the disk drive market, in terms of pricing and the business cycle," said Mark Miller, an analyst at Hoefer & Arnett, a San Francisco-based investment bank.

Over the past two years, Seagate has managed to steal market share from its competitors. The company now has approximately 60% of the high-end server market, compared to 36% four years ago.

Seagate didn't specify when it plans to make its offering, other than to say in a filing with the

Securities and Exchange Commission

that it would wait until market conditions permit. As stocks have swooned in recent months, many companies have postponed or withdrawn their IPOs.

"Seagate will wait until the market looks right," said Jim Porter, an analyst at Disk/Trend, which does market research for the disk drive industry, "which could be this quarter or next year."

Despite lackluster conditions overall, some new entries have seen a little bit of spark on the market. Shares of re-insurer

Montpelier Re


are up 19% since they debuted last week and ended a two-month dry spell for IPOs.

This week, three other offerings,

Dick's Sporting Goods

, insurance firm

U.S.I. Holding Group

, and

Plains Exploration & Production

, are set to price. After last week's rally in which the Dow gained 4.2% and the Nasdaq rose 6.1%, they will hope to take advantage of an upswing.

For his part, Miller expected Seagate to come back to the public markets fairly quickly. "Investors want to get their money, and management wants to reap rewards," he said. "They will benefit from the privatization of the company through this equity offering."

Among other reasons, Seagate went private to unlock the value of its investment in one-third of

Veritas Software

(VRTS) - Get Report


At the time, Seagate couldn't distribute Veritas stock to shareholders without paying a prohibitive amount of tax. So, the company arranged for a buyout in order to transfer Veritas shares to its holders. In the process, the company also moved its headquarters from California to the Cayman Islands.

Seagate plans to use the proceeds from its IPO to pay for its deferred compensation plan and general corporate purposes, including working capital, research and development, sales and marketing, and capital spending. It will also make a $250 million distribution to existing investors, who own about 400 million Seagate preferred shares.

Morgan Stanley and Salomon Smith Barney will be lead managers on the deal, according to the company's SEC filing. Other underwriters include Goldman Sachs, J.P. Morgan, Bear Stearns, Credit Suisse First Boston, Lehman Brothers, Merrill Lynch, and Thomas Weisel Partners.

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