BERLIN -- Some stocks are born great. Some have greatness thrust upon them. And some achieve greatness. And in this manic age of initial public offerings, the birth and the thrusting of greatness can happen at the same time. Case in point: next week's IPO in Germany of
, a semiconductors subsidiary of electronics giant
But whether it can achieve greatness over the long term is another question.
As Europe's third-largest chipmaker, expectations for Infineon's IPO have been high, especially after the successful floatation of another Siemens unit,
, last fall. But as Infineon's shares are priced Sunday and begin trading in Frankfurt and New York on Monday, those expectations would appear to have been more than exceeded.
Although the stock is expected to price at 35 euros ($33.80) -- the top of its range -- it's already being traded on the gray market for triple that. The 6 billion-euro offering is reportedly 30 times oversubscribed. It would seem that everyone in Germany, from graying pensioners to unemployed students, is convinced of Infineon's -- or rather the stock's -- success.
The enthusiasm stems partly from Infineon already being touted as a possible candidate for the
, Germany's blue-chip stock index, despite the rather cyclical nature of the computer chip business. Infineon's market capitalization, initially 20 billion euros, will likely become larger than that of many of Germany's best-known companies after the stock soars Monday. It could even surpass that of Epcos, which joined the Dax last month.
Equity-hungry pensioners might be on to something if Epcos' experience on the bourse is any guide. The maker of transistors and other electronic components listed in Frankfurt and New York back in October. Since then, the stock has shot up more than 400%. Even the shares of the stodgy parent company have tripled in the past 12 months. On Friday, Epcos closed down 0.4% at 141.50 euros and Siemens finished 2.2% higher, at 186.50 euros.
Those kinds of returns have generated such a surge in demand for the Infineon IPO that it might become a milestone in the development of Germany's blossoming equity culture, much as the original
offering did three years ago. Indeed, this correspondent has been hectored with queries from acquaintances who are complete equity novices. Not to ask about what Infineon does or how its fundamentals look, mind you, but rather to inquire as to the ins and outs of getting their greedy little mitts on a piece of the company.
However, investors fortunate enough to obtain shares in the coming week may rue their luck down the road, given the nature of Infineon's business. Analysts stress the cyclical and volatile aspect of chip making, about which some neophyte investors are certainly oblivious. "Although we expect growth to be solid throughout this year ... a correction may begin to affect the semiconductor stocks in the third quarter," says Stuart Adrian, an analyst for
Morgan Stanley Dean Witter
, which has an investment banking relationship with Siemens.
The risks that come with investing in stocks likely won't stop Germans from throwing cash at two more premium IPOs later this year. If they miss out on Infineon, as soon as April 3 they'll be able to buy shares in Deutsche Telekom's Internet unit,
, and some months later DT will float its mobile phone operator,
While all the enthusiasm surrounding Infineon may very well make it a milestone, investors might not celebrate: The volatility of the company's business could eventually teach many of Germany's new investors that stock prices don't just go up.