|
IPO pack continues to expand
|
 |
August 6, 2000: 7:15 a.m. ET
38 deals expected to open; McData, H Power bright spots
By Staff Writer Luisa Beltran
|
NEW YORK (CNNfn) - The surging new issues market will offer something for everyone this week. Typical issues from infrastructure providers and chip makers litter the pack but exciting deals from a duo of alternative energy suppliers and a provider of low-cost personal computers are expected to liven things up.
This week, 38 initial public offerings are expected to price raising $3.2 billion. The parade of deals follows last week's near record numbers when 41 deals were expected but 29 actually priced, raising $2.8 billion, according to CommScan, a New York-based investment banking research firm.
The technology sell-off in the second quarter spurred the present glut of initial public offerings, analysts said. The IPO market surged during the first quarter and then crashed in April.
 "We went through a period where the market wasn't hospitable toward IPOs," said Arnold Berman, chief technology analyst at Wit Soundview.
The low period created a backlog and companies are now rushing to go public.
"They're playing catch-up," Berman said. "At the same time, there are enough entrepreneurs that are afraid [a crash] could happen again. There is now a rush by companies to get their [IPOs] done sooner rather than later."
The little generators that could
Unlike the consistent tide of infrastructure and broadband deals, alternative energy companies rarely appear in the IPO market. But when they hit, they usually hit big. Two such companies are expected to begin trading.
The first, H Power Corp., is a holdover from last week but the wait should be worth it, analysts said. The fuel cell company provides small systems -- which look like small generators -- that provide electricity for stationary, portable and mobile applications. So far, the Clifton, N.J.-based H Power has provided its little generators for use in golf carts, traffic signs and in rural areas.
"We like this deal," said Matt Zito, co-founder of IPOguys.com, a Web site for retail investors. "The exciting development will come when H Power technology will provide residential homes with a total electricity system."
H Power is similar to the Latham, N.Y.-based Plug Power, another provider of fuel cell generators, which has performed well in the aftermarket. Plug Power (PLUG: Research, Estimates) went public in October, hit a high of 156-1/2, and closed Friday down 3-3/32 to 39-1/8.
H Power plans to offer 7 million shares at $11 to $13 via lead underwriters Lehman Brothers and trade under HPOW.
Active Power Inc. also receives high marks from analysts. The Austin, Texas-based company makes "power quality products" such as flywheel storage systems that are a cheap alternative to lead-acid batteries. Active Power has developed a battery-free electrical system that is marketed under the Caterpillar name.
Active Power plans to offer 8 million shares at $11 to $13 each through underwriters led by Goldman Sachs and trade under ACPW.
In love with backbone
Wall Street is continuing its love affair with backbone deals, those companies that provide the plumbing for the Internet. McData Corp., a unit of EMC Corp. (EMC: Research, Estimates), provides switches and related software that connect servers and storage networks, speeding the flow of data on the Web.
McData also offers something rare in the IPO market—profits. The Bloomfield, Colo.-based company generated $103.6 million in revenue for the six months ended June 30 on net income of $10.8 million.
"Their revenue stream has grown tremendously," said Mike Falbo, an analyst at ipoPros.com. "They are moving in the right direction."
Falbo predicts McData will generate a 5-point premium when it opens.
McData plans to offer 12.5 million shares at $19 to $21 each via underwriters Credit Suisse First Boston and trade under MCDT.
Radview Software Ltd., a provider of software to monitor the performance of Web applications, is also expected to fare well. Analyst peg this deal to follow the recent success of Resonate Inc. (RSNT: Research, Estimates), a developer of e-business software, which surged 72 percent on August 3. Customers include American Express, Compaq and Dell Computers.
Radview expects to offer 5 million shares at $10 to $12 each through underwriters led by Donaldson Lufkin & Jenrette and trade under RDVW.
More chips
Semiconductors are traditionally a hot sector in the IPO market and ChipPac Inc. won't be an exception, analysts said. Another holdover from last week, the Santa Clara, Calif.-ChipPac provides semiconductor packaging and testing services.
"It's a fairly large issue but the semiconductor sector continues to be really strong," Ostman said. "It wouldn't surprise me if they increase the range going forward."
ChipPac plans to sell 15.5 million shares at $20 to $22 each via underwriters led by Credit Suisse First Boston and trade under CHPC.
Popular but iffy
Buying personal computers through companies like Gateway Inc. (GTW: Research, Estimates) and Dell Computer Corp. (DELL: Research, Estimates) has emerged as a good way to cut costs while receiving a reliable computer. Now another player, PeoplePC Inc. is generating buzz, but whether the company is a good investment is questionable, analysts said.
The San Francisco-based PeoplePC targets new Web users by selling computers with unlimited Internet access. Members need only sign a three-year contract and can pay as little as $24.95 a month, the company said in a filing with the Securities & Exchange Commission.
"The interesting thing is that they seem to be developing pretty decent brand recognition among consumers," Ostman said. "It does show that there is some demand for more non-infrastructure issues."
PeoplePC plans to offer 11.5 million shares at $12 to $14 each via underwriters led by Chase H&Q and trade under PEOP. The company had originally filed an 8-million share deal via Goldman Sachs.
However, similar deals haven't fared well. Emachines Inc (EEEE: Research, Estimates), another provider of cheap PCs, went public in March offering 20 million shares at $9 each. On Friday, the company fell 1/32 to close at 2-1/32.
The Latin fizzle
Latin American service providers were once hot but as technology melted second quarter, the sector fell with it. America Online Latin America Inc. would have done better coming earlier this year, analysts said, but the company is stubbornly trying to launch its deal with little success. Last Tuesday, AOL Latin America sliced its deal's price range to 25 million shares at $8 to $10 each, down from the originally planned $15-to-$17 a share. Salomon Smith Barney and Donaldson Lufkin & Jenrette are lead underwriters. The company plans to trade under AOLA.
AOL Latin America had expected to price its deal this week. The company, a joint venture between AOL (AOL: Research, Estimates) and the Cisneros Group formed in December 1998, has faced a rocky road to its initial public offering. The Latin American service provider is facing higher-than-anticipated subscriber cancellations in Brazil, mainly due to free service offered by rivals. AOL Latin America competes against competitors such as El Sitio (LCTO: Research, Estimates), StarMedia Network Inc. (STRM: Research, Estimates) and Terra Networks S.A. (TRRA: Research, Estimates). (AOL signed an agreement earlier this year to merge with Time Warner Inc., the parent company of CNNfn.)
The sector for Latin American service providers is flooded, analysts said, leaving little room for another company targeting the same audience. In December, rival El Sitio launched its own IPO, pricing 8.2 million shares at $16, but has since plummeted. On Friday El Sitio gained 1/4 to close at 4-3/8. A similar company, the Miami-based Yupi.com, pulled its IPO in April, citing market conditions.
"AOL Latin America's price dropped pretty dramatically so we are assuming the institutions are not clamoring for the issue," said Corey Ostman, co-chief executive of Alert-IPO.com. "There doesn't seem to be that much interest." 
|
|
|
|
|
 |
|
