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Which IPO will shine?
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May 7, 2000: 8:15 a.m. ET
In a week of few debuts, investors will look for hidden gem
By Staff Writer Kim Khan
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NEW YORK (CNNfn) - If Yogi Berra were an IPO analyst, this week would certainly be a case of déjà vu all over again.
With only six deals, five of which are carryovers from other weeks and none of which are guaranteed to price, investors will be looking for the one bright spot.
Last week Sonic Innovations (SNCI: Research, Estimates) soared more than 50 percent on is first day of trading and managed to hover around its initial closing price for the rest of the week. The Salt Lake City, Utah-based company makes more affordable hearing aids designed to be very discreet.
Companies are hesitant to open in an uncertain market and last week did nothing to allay those fears. With the Dow and Nasdaq rallying and correcting at will, there's little a debut share can count on.
Which company this week has the clout to break out of the IPO market rut?
Irv DeGraw, research director for WorldFinanceNet.com, said Sequoia Software, which makes applications powered by the XML programming language, has a slightly better chance than the rest of the companies planning to price.
"We like their XML interactive portal capabilities and it will have a degree of interest," DeGraw said. "This is not a breakthrough, it's a continuation of other XML deals."
Sequoia, which will trade under the symbol SQSW, plans to raise about $38 million, pricing 4.2 million shares between $8-10. Sequoia is the one company this week that has not moved its intended pricing date. Lehman Brothers is the lead underwriter for the deal.
Corey Ostman, of Alert!IPO, does not hold out too much hope for the carryover companys taking the plunge.
"It's a very light week in term of size of shares," Ostman said. "There's a lot of carryover from last week, so they may slip again."
Those carryovers include Paradigm Genetics (PDGM), which has postponed indefinitely its pricing once and moved it three times and Digitalwork.com (DWRK), which has moved seven times.
Paradigm is a biotech company specializing in gene function determination. The biotech sector has been the whipping boy for investors, but the company followed the same plan as Orchid Biosciences (ORCH: Research, Estimates), which rose strongly Friday after cutting its price range to $8-9 from $11-13 and decreasing the number of shares it offered to 6 million from 8 million.
Paradigm cut its price range in half to $7-8 from $14-16 and boosted the number of shares offered to 6 million from 5 million. The company now plans to raise about $45 million, down from $75 million.
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.
Analysts say Digitalwork.com has good long-term outlook but there are concerns about revenue. According to IPO.com the company had just under $2 million in revenue in 1999 and lost more than $15 million.
Light at the end of the tunnel
Investors should not despair if this week turns out to be a glut of carryovers. WorldFinanceNet.com's John Fitzgibbon, Jr. said things are starting to look up by the week of May 15, with a number of good-looking deals.
Fitzgibbon said there's a correlation between a sharp correction in the markets and a healthy IPO market six weeks down the road.
"Between March 10 and April 15 the Nasdaq took a 34.2 percent hit," Fitzgibbon said. "Six weeks down the road takes us to the end of May."
He pointed out Pixelworks Inc. (PXLW) as a promising deal. Tualatin, Ore.-based Pixelworks is semiconductor company specializing in broadband - two words guaranteed to get investors' attention.
By pricing 5.75 million shares between $12-14, the company intends to raise about $74.75 million. The deal's lead manager is Salomon Smith Barney. 
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