Updated from June 11.

A slow IPO market has served the few companies to have gone public this year very well. FormFactor ( FORM), a manufacturer of semiconductor-testing equipment, is the latest to join the party.

FormFactor shares were recently up $4.20, or 30%, at $18.25 on their debut of trading. The 6 million share offering priced late Wednesday at $14 a share, $1 above the top end of the final price-talk range. It is the first IPO to price above range since the Chicago Mercantile Exchange ( CME) last December, according to Thomson First Call.

Since the beginning of the year, only seven new issues have come to market. With one exception, each stock is trading above its debut price, in concurrence with gains in the broader market. "The improvement in these stocks' performance is an indication that the investor is starting to embrace the value that is in these companies," said David Menlow, president of IPOFinancial.com.

FormFactor's first-day run, while impressive, falls well behind average debut gains of 67% in 1999, when 526 companies went public. For its part, FormFactor is the first domestic technology hardware offering of 2003, and the most recent since Seagate Technology's ( STX) disappointing debut late last year.

On their initial day of trading, shares of Seagate Technology fell below their opening price. Some felt that the offering of 72.5 million shares, underwritten by Morgan Stanley, was too large for the market. Morgan Stanley is also lead manager on the much smaller FormFactor IPO.

"Morgan Stanley has some ground to make up," said Menlow, who is optimistic about the FormFactor deal. "They have to prove to Wall Street that they can still put together the right offering."

There have been other IPO complications this year. DigitalNet, an IT services provider, withdrew its offering in May, blaming market conditions. The news followed a difficult quarter for the company. Salomon Smith Barney would have served as lead underwriter on that deal.

Slow Year So Far for IPOs
Except for Bancshares of Florida, each is trading above its debut price
Company IPO Debut Offering
Price
June 11 Close Percent Change
Bancshares of Florida (BOFL) Feb. 10, 2003 $10 $9.70 -3%
Infinity Property & Casualty (IPCC) Feb. 11, 2003 16 21.29 +33
Accredited Home Lenders (LEND) Feb. 13, 2003 8 22.30 +179
Endurance Specialty Holdings (ENH) Feb. 27, 2003 23 29.44 +28
Telkom SA (TKG) March 3, 2003 13.98 16.50 +18
iPayment (IPMT) May 12, 2003 16 22.45 +40
Redline Performance Products (RED) May 15, 2003 4.50 4.56 +1

Credit-card processor iPayment ( IPMT) delayed its offering in May, following revelations that an analyst at Bear Stearns, the underwriter, promoted the company in a Webcast. Despite the conflict-of-interest question, iPayment is up 40% since its debut.

Ironically, Morgan Stanley lowered its rating on a handful of semiconductor manufacturers to in line from attractive Wednesday, after an earnings warning from Texas Instruments ( TXN).

For its part, FormFactor had sales of $18.7 million for the three months ended March 29, 2003, up from $17.3 million in the year-ago period. Net income fell to $699,000 from $846,000 over that period. "Investors are focusing on more quality companies," said Steven DeSanctis, an analyst at Prudential.

FormFactor's IPO follows a successful secondary offering from MEMC Electronic Materials ( WFR), a semiconductor-wafer manufacturer, in May.

The fact that FormFactor will come to market at a period of inactivity for IPOs could help. "Typically, when the deal calendar is slow, performance will keep going," said DeSanctis.

The debut will be watched closely as a proxy for new issues going forward. "This is not a stock that will turn the IPO market around," said Menlow. "But it could be a foundation layer that will rebuild confidence that was evaporated by market conditions over the past two years."

Currently, there are several IPOs in the hopper, with recent filings from outsourcing firm Hewitt Associates, information-management provider Crystal Decisions, auto insurer Direct General, fish supplier American Seafoods and retailer White House, Inc.

Many IPO market-watchers are anticipating an offering from Internet search engine Google. "It would create a groundswell of interest," said Menlow. Google "could be the stock of the year."