Wink, Netro Show Net IPO Strength Amid Market Weakness

But whether the IPO market's cooling or heating up for the Internet sector is still up in the air.
Author:
Publish date:

If the trend is truly your friend, then the Internet IPO market may be less popular than

Theodore Kaczynski

. Today's fare of stock debuts and IPO news offered up little direction on how to gauge investor enthusiasm for this segment of the market.

Following in the tradition of

Red Hat

(RHAT)

, which has scorched its way to 72 3/8 from its IPO price of 14, a couple of tech-related IPOs have garnered significant investor support today.

Wink Communications

(WINK:Nasdaq), which provides e-commerce enabling software for cable TV set-top boxes, was up 17 5/8, 110%, at 33 5/8, while

Netro

(NTRO:Nasdaq), a telecommunications company that provides broadband wireless access systems, was up 11 5/8, or 145%, at 19 5/8. Another IPO,

HeadHunter.net

(HHNT:Nasdaq), which allows companies to post job listings and job seekers to submit resumes, was up 15/16, or 9%, at 10 15/16.

Putting a damper on this strength, however, is news from the IPO pipeline. According to

CommScan

, an investment banking and research firm, 15 IPOs were withdrawn or postponed last week, seven of which involved Internet-related stocks. Seven have been postponed this week, and three of those were Internet stocks, including

Tunes.com

(TUNZ:Nasdaq), which was delayed on Wednesday, even after the company reduced its price range.

LookSmart

(LOOK:Nasdaq), which is expected to price tonight, reduced its offering to 9 million shares from 12 million, while

Mypoints.com

(MYPT:Nasdaq), also expected to price tonight, revised its range to 8 from 10-12. Bucking this trend, however,

Agile Software

(AGIL:Nasdaq), which is in the hot category of Internet-related software, upped its price range to 18-20 from 15-17.

Oversupply has obviously been listed as a reason for weakness in the Internet IPO market, and Richard Peterson, a market strategist for

Securities Data

, pointed out that around 135 of the 260 deals to come out this year have been Internet-related. (Peterson arrived at the 260 figure by factoring out "noise" like foreign companies, spinoffs, closed-end investment funds and real-estate investment trusts.)

With so many deals postponed, Peterson believes the market may not see its typical slowdown in September. He still expects the business-to-business companies to succeed at the expense of the retail companies.

Perhaps the best way to gauge a deal's likely success is to examine its underwriter. It's a simple and popular concept that Peterson believes has held true among Internet IPOs recently. Of the 37 underwriters that have been the lead underwriter for Internet deals, 19 had offerings trading below their offering price, he said. And of the 21 managers that have been the lead underwriter for just one Internet IPO, 17 were trading below their offering price, he said.

There have been nine firms that have been the lead underwriter for six or more Internet deals, and Peterson said that, based on closing prices from Wednesday,

Morgan Stanley Dean Witter

offerings were performing the best, up an average of 213% for 13 deals. In decreasing order of gains,

Lehman Brothers'

10 deals have averaged 86%;

Credit Suisse First Boston's

14 have averaged 74%;

Goldman Sachs'

19 have averaged 72%;

Bear Stearns'

seven have averaged 36%;

Donaldson Lufkin & Jenrette

seven have averaged 31%;

BancBoston Robertson Stephens'

12 have averaged 25%;

Hambrecht & Quist's

six have averaged 15%; and

Deutsche Banc Alex. Brown's

seven have averaged 5%.

On the downside,

ING Barings'

one deal has dropped 63%;

Volpe Brown Whelan's

one has lost 59%;

Ladenburg Thalmann's

one has decreased 57%; and

Gruntal's

one has fallen 48%, according to Peterson.