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IPOs: I as in Internet?
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March 28, 1999: 6:13 p.m. ET
Virtual plays still dominate debut market, but Pepsi Bottling float looms
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NEW YORK (CNNfn) - Once again this week, the 'I' in 'IPO' looks set to stand not only for 'initial' public offering but 'Internet' as well, as the majority of companies ramping up for Wall Street debuts remain firmly rooted on the Web.
Out of the seven IPOs that successfully made it to the market last week, only two -- Wednesday's Ducati Motor Holding (DMH) and Thursday's Delta Galil (DELT) - were not intimately linked to the Internet sector. Both were initial U.S. floats of overseas companies, and while neither can be considered a pure "broken" IPO, both remain flat after their first days of public trading.
The other five debuts only underscored the IPO market's narrowing concentration on virtual plays or nothing at all. Between them, Autobytel.com (ABTL), Autoweb.com (AWEB), Valley Media (VMIX), OneMain (ONEM) and MiningCo.com (MINE) raised $485 million in their debuts, meeting resounding applause from Net-hungry investors.
However, other than the lackluster overseas plays, every non-Internet company scheduled to go to market last week found Wall Street daunting, pushing their offerings off into a vague but possibly more inviting future.
Two will try again this week, as telecom provider Destia Communications and MKS Instruments near the offering block once more. The others -- including Transistor Devices, Nichols TXEN, golf instructor Proformance Research, Careside and Consol Energy -- have delayed their debuts until next month or even later.
Other ghosts from the IPO market's past could include plastic manufacturer International Smart Sourcing and pipe layer Holloman, as well as Internet players Ziff-Davis and Priceline.com.
Fresh blood offline?
Joining this parade of familiar faces and perennial hopefuls, Pepsi Bottling Group may be the market's best bet for a non-Internet initial play this week. Based in Somers, N.Y., the company is the largest global manufacturer of Pepsi-branded beverages, with exclusive bottling and distribution rights in 39 states, Spain, Greece and Russia.
If Pepsi Bottling follows the success of fellow beverage maker Coca-Cola Enterprises (CCE), investors should grab thirstily for the company's massive initial offering. Lead underwriter Merrill Lynch and nine other investment banks plan to float a full 100 million "PBG" shares sometime this week at an expected price between $23 and $26, raising up to $2.6 billion.
Although the company is massive, with $7 billion in revenue last year, it is also heavily burdened by debt and reported a 1998 operating loss of $146 million. Proceeds from the float will help the company service its debts.
Other than Pepsi Bottling, only a few fresh non-online companies are entering the IPO lists this week. In an echo from the pre-Internet days when biotech debuts were the hottest game in town, medical testing firm Gen Trak is set to greet Wall Street in the next few days.
The Plymouth Meeting, Pa.-based company, which has not yet settled on a ticker symbol, specializes in paternity and other genetic testing equipment, selling primarily to hospitals and private laboratories. Underwriter Barron Chase already has priced the initial float of 650,000 shares at $10.
Meanwhile, plans to go public at some point in March are coming to a deadline for Irving, Tex.-based Evercom, which provides telephone services to more than 2,000 correctional institutions.
Like Pepsi Bottling, Evercom is a well-established private company betting on a cash infusion from Wall Street to reduce a heavy debt burden -- in addition to using the proceeds from its $125 million offering for equipment purchases, the company plans to pay off $10 million in credit.
Let's get back to the Internet
Such diversions aside, investors will have eyes only for the week's Internet plays if recent performance is any indication.
Among the fresh dot-coms on the horizon, two -- Litronic and NetSolve -- share a focus on network security, with Litronic specializing entirely on Internet encryption applications.
Litronic's Internet security protocol has been adopted by Netscape, VeriSign, IBM, Microsoft and others, including the National Security Agency, for ensuring that transmissions of sensitive data like credit card numbers or corporate secrets remain safe from intrusion.
To deepen its commitment to enterprise-level corporate solutions, Irvine, Calif.-based Litronic will celebrate its IPO by buying network solutions provider Pulsar, using its proceeds from the Wall Street debut to fund the acquisition.
The company plans to issue 3 million shares at a starting price between $9 and $11 under the ticker symbol "LTNX."
On the other hand, Austin, Tex.-based NetSolve already has its fingers deep in the enterprise market, selling round-the-clock network management services to 375 corporate clients.
In particular, the company offers remote intrusion protection, firewall hosting and other computer security services, helping customers ensure the integrity of their internal electronic communications and data storage.
Underwriters BB Robertson Stephens and Hambrecht & Quist have not yet set the number of shares in the initial float, which will launch under the ticker symbol "NTSL."
Also on tap this week, Internet service provider Log On America plans to put 2 million shares under the ticker symbol "LOAX" on the offering block for $10 apiece, while Web hosting firm USInternetworking is set to go public with 5 million "USIX" shares priced between $11 and $13.
-- by staff writer Robert Scott Martin
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