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IPOs losing initial glow
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April 1, 1997: 2:41 p.m. ET
Offerings that once only went up now face a less certain future
From Correspondent John Defterios
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NEW YORK (CNNfn) - Initial public offerings are losing their initial luster.
During the past two years, the average IPO gained nearly 30 percent the first day, but during the first quarter of 1997, that initial pop was just 12 percent.
A year ago, institutional investors tended to gobble up the most promising new issues. But now the market is so slow that even small investors are getting in on the first day of trading.
All kinds of investors are looking more closely at the track records of IPOs, questioning the high-tech dreams of companies that never turned a profit.
"There was a lot of hype, and I think the media and a variety of market watchers raised the red flag," said Aleksandrs Rozens, senior editor of Investment Dealers' Digest magazine. (356K WAV or 356K AIF)
In 1997's first quarter 138 companies went public, compared with 172 in last year's first quarter. And new issues have raised $6 billion, down from $8.3 billion last year.
IPOs in the technology field have been hit particularly hard. Netscape Communications Inc. and Yahoo are among just a few IPOs that are still trading above their initial offering price.
Some tech analysts see a bright side to that. "It's much easier to buy IPOs today than it was a year ago," said Roger McNamee, a venture capital analyst with Integral Capital Partners. "You can get stock now where you couldn't before."
The reduced number of IPOs actually shows that better offerings are coming to the market, McNamee said.
"The market is acting as a filter, getting rid of the stuff that shouldn't be public in the first place," he said.
The cost of IPOs reflects the buyers' market. Analysts say companies are going public at prices far lower than a year ago. 
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