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IPO week uncertain
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April 30, 2000: 7:00 a.m. ET
Few deals planned as IPO market takes a breather
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NEW YORK (CNNfn) - After the biggest U.S. initial public offering in history, what does the IPO market do for an encore? Take it easy.
Only six companies are set to offer, four of which are carry-overs from last week, and none of which seem capable of setting the market alight.
"This next week will be very, very quiet," said Irv DeGraw, research director at WorldFinanceNet.com. "Not only are there very few deals, but these are deals that wouldn't do well in a strong market."
Where the market goes this week is the big question. The biggest offering this week, Orchid Biosciences, is 1/100 the size of the $10.6 billion AT&T Wireless (AWE: Research, Estimates) deal and all will be much more susceptible to market swings.
Three companies - Birch Telecom, Inventa Technologies, ClientLogic Corp. - postponed their offerings indefinitely last week, citing market conditions, while DoveBid Inc. cancelled its IPO altogether. According to analysts that trend could continue if volatility on the Nasdaq persists.
"Underwriters are skittish and they're waiting to see the fallout of the Microsoft news," Alert!IPO Chief Technical Officer Corey Ostman said. But Ostman added there is potential for more deals to come out if conditions improve.
RedHerring.com IPO analyst John Fitzgibbon thinks the IPO market has turned a corner and is getting stronger.
"There's an accumulation of good signs in the IPO market," Fitzgibbon said.
The success of AT&T Wireless and ON Semiconductor have encouraged the IPO market, but are also indicative of the type of deals that are going to do well - strong companies with proven performance.
"If you're a good deal you're going to get done," said DeGraw. "If you're not a good, strong, solid deal, there's no hope for you."
What's on tap?
Orchid Biosciences (ORCH) is the biggest planned deal of the week. The pharmaco-genetic research company plans to raise $96 million, with 8 million shares priced between $11 and $13. The biotech sector has been slaughtered recently by investors and the company had under $2 million in revenues for 1999 with a loss of more than $24 million.
But Fitzgibbon said the deal could go well, depending on the pricing.
"If they price it right, and I'm sure Credit Suisse First Boston will price it right, it will do OK," he said.
Internet services company Digitalwork.com (DWRK) may test the stormy dot.com IPO waters. But its pricing has already been pushed ahead four times and this makes DeGraw anxious.
"There's a pretty decent outlook for the longer term," said DeGraw. "But then there's $2 million in (annual) revenues - that's not going to do it."
Digitalwork.com provides "Do-it-yourself" business services for small business owners and entrepreneurs. The company plans to raise $75 million, with 6.25 million shares priced at $11 to $13 and the deal is underwritten by Lehman Brothers.
Another company pushed from last week is Wherever.net Holding Corp. (WNET), an IP telephony company for Asian markets. The company will price 4.5 million shares between $11 and $13 to raise about $54 million. Merrill Lynch is the lead underwriter of this offering.
"IP telephony didn't do well over here, but it might take off really well in Asia," Ostman said.
The three other deals on the schedule this week are biotech company Virologic (VLGC), pricing 5 million shares between $14 and $16 for $75 million, digital hearing aid maker Sonic Innovations (SNCI) pricing 3.6 million shares between $12 and $14 for $46.8 million, and Qualstar Corp. (QBAK), pricing 3.25 million shares between $10 and $12 for $35.75 million. 
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