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IPOs struggle yet again
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November 21, 2000: 4:48 p.m. ET
New-issue market stumbles as it seeks direction; Alliance falls in debut
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NEW YORK (CNNfn) - Three new issues, all led by A-list underwriter Merrill Lynch, failed to rise above their offer prices Tuesday as the IPO market continued to search for leadership amidst volatility in the broader market.
All three companies -- Alliance Fiber Optic Products Inc., iMagic TV, and Telekom Austria AG -- got off to a rocky start Monday when they priced at the bottom end of their expected ranges, typically a sign that investor demand for the issues was weak.
That rule proved true Tuesday, as Alliance Fiber Optic Products Inc. fell 88 cents to close at $10.12 and Telekom Austria AG tumbled $2 to end the day at $13.44. The third issue, iMagicTV Inc., spent much of the day in negative territory, but managed to close trading unchanged at $9 per share.
Alliance Fiber followed in the footsteps of other fiber-optic deals the past few weeks, which have failed to generate the strong first-day gains that have served as a rallying point for the IPO market this year.
"With no particular sector to provider leadership, it's hard to have a general trend," said Corey Ostman, co-chief executive of Alert-IPO.com.
 The continued volatility of the Nasdaq is also hampering IPOs, Ostman said. Tuesday, Lucent Technologies restated its previously reported fiscal fourth quarter, ending hopes of a technology rally.
"We will see a few deals come out this week but we won't see the strength come back to IPOs until Nasdaq comes back," Ostman said.
Alliance Fiber Optic Products (AFOP: Research, Estimates) raised $49.5 million after selling 4.5 million shares at $11 each, the bottom of its $11 to $13 price range, via lead underwriters Merrill Lynch. The company originally filed to sell 6.25 million shares at $11-to-$13.
Sunnyvale, Calif.-based Alliance designs and makes fiber-optic networking components. The component maker targets communication equipment manufacturers such as Alcatel (ALA: Research, Estimates), JDS Uniphase Corp. (JDSU: Research, Estimates) and Tyco International (TYC: Research, Estimates).
Alliance's weak performance follows the dismal gain of Luminent Inc. (LMNE: Research, Estimates), a unit of MRV Communications Inc., which specializes in fiber-optic components for high-capacity data transmission in metropolitan and access markets. On Nov. 10, Luminent rose 13 cents, or 1 percent, to $12.13.
Digital TV
St. Johns, New Brunswick-based iMagicTV Inc. (IMTV: Research, Estimates) sold 4.75 million shares at $11, the bottom of its $11 to $13 price range, via underwriters led by Merrill Lynch.
ImagicTV develops software that lets telephone service providers deliver digital and interactive television services to their subscribers' TVs and personal computers. The company's software operates over broadband or high-speed communications networks.
ImagicTV has nine customers in North America and Europe and had a loss of $5 million on revenue of $3.6 million for the six months ended August 31, 2000.
Similar IPOs have not fared well recently in the aftermarket. Tivo Inc. (TIVO: Research, Estimates), a television subscription service provider, opened in 1999 and reached a 52-week high of $78.75 but has since plummeted. Shares are now trading at $12.81.
A big board IPO
Telekom Austria sold 64.4 million American depositary receipts (ADRs) at $15.28 each via lead underwriter Merrill Lynch. One ADR equals two shares of the company's common stock. Telekom Austria had planned to sell 70 million ADRs at $15.12-to-$20.16 each.
Click here to read about Telekom Austria's rocky debut in Austria Tuesday
Vienna, Austria-based Telekom Austria is making the switch from a predominately voice operator to a media communications group, offering Internet protocol-based service. It is reducing its reliance on the voice telephone market in Austria and targeting the business and residential markets by providing advanced voice, data, multimedia and content services via broadband and wireless technologies.
Telekom Austria (TKA: Research, Estimates) is trading in the United State on the New York Stock Exchange, as well as in Austria. 
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