Marvell rises 278% in debut
Tech IPOs attract buyers; Stratos climbs 68%; Click Commerce up 76%
NEW YORK (CNNfn) - The initial public offering market renewed its thirst for hot technology stocks Tuesday as chipmaker Marvell Technology Group Inc. surged 278 percent and Stratos Lightwave Inc., a developer of optical subsystems, climbed 68 percent.|
Click Commerce Inc., a software provider for business-to-business companies, rose nearly 77 percent, while eFunds Corp., a supplier of electronic payment services, did not budge.
Marvell more than tripled its offer price, surging 41-5/8 to 54, while Stratos yo-yo'd, more than doubling early on before settling at 34-1/8, up 13-1/8. Click Commerce climbed 7-5/8 to 17-5/8, while eFunds Corp. traded flat at 13.
The four deals come in the strongest week in the IPO market since April. For the week ending June 30, 19 IPOs are expected to price, including four foreign offerings, raising $4.06 billion, according to CommScan, a New York-based investment banking research firm.
On Friday, four deals also produced strong gains with Accelerated Networks Inc. (ACCL: Research, Estimates), a telecommunications technology provider, surging more than 219 percent in its first day.
However, a good week does not mean the IPO market is rebounding, said Rick Spence, technology analyst at Raging Bull, a financial Web site. A summer slowdown combined with higher interest rates and increased investor selectivity will continue to produce a discriminating market.
Stratos could not even keep its rally going though its first trading day, and after Accelerated continued its strong gains Monday, shares plunged 15-1/2 today to settle at 45-1/2.
"The greed is back, that's always under the surface," said Francis Gaskins, president of GaskinsCo.com. "The speculation is back and people are trying to get in before [the stock triples]."
"It will be harder for companies with marginal plays to get out the door," Spence said.
Only infrastructure deals and companies with fundamentals will continue to do well, he added, and any rebound will not occur until around September.
"By the fall, products will be announced and things will ramp up again," he said.
Marvell moves into broadband
Marvell raised $90 million after pricing six million shares at $15 each, the top of the range, through underwriters led by Goldman Sachs. The deal, originally filed at $9-to-$11, was boosted to $12-to-$14.
Jeremy Lopez, a stock analyst at Morningstar, said Marvell has traditionally supplied chips for the storage market, which is expected to slow in the future.
"The company is looking to leverage its technology into broadband access and local area networking," he said. "Moving into that place is good. But relative to other IPOs, there is a lot of quality here given the fact that Marvell is profitable."
Hamilton, Bermuda-based Marvell Technology (MRVL: Research, Estimates) designs and develops integrated circuits designed to let customers, such as Seagate, Samsung and Toshiba, store and transmit digital information reliably and at high speeds.
Prior to March, most of Marvell's products were used in the mature data storage industry, but the company now is moving into the high-powered broadband sector. In December, the chipmaker introduced its first product for Fast Ethernet applications that connect devices at data rates of 1,000 megabits per second. Marvell also produces products for wireless and cable modem markets. The company plans to use the IPO's net proceeds for general corporate purposes including working capital and capital expenditures.
For the three months ended April 30, Marvell reported net income of $2.1 million on revenue of $29.7 million, compared with net income of $2.1 million on revenue of $14.1 million in the year-earlier quarter.
The company depends on a small number of customers for much of its revenue. In fiscal 2000, Samsung accounted for 34 percent, Seagate for 24 percent, Hitachi at 14 percent, Fujitsu at 14 percent, and Toshiba accounted for 10 percent.
Competitors include Lucent Technologies, Texas Instruments, Cirrus Logic and STMicroelectronics.
At lightwave speed
Stratos Lightwave Inc. rose 13-1/8 to 34-1/8 Tuesday after raising $183.75 million. The company priced 8.75 million shares at $21 each, above the expected range, through underwriters led by Lehman Brothers. Price talk was 8.75 million shares at $16-to-$18 each.
Stratos Lightwave's rise follows the strong first debut of ONI Systems Corp. (ONIS: Research, Estimates), an optical networking equipment provider, which on June 1 climbed 230 percent in its first day trading.
Stratos shared jumped sharply at the outset, hitting an intraday high of 56-1/8, but fell later in the day.
"A lot of people got carried away with Stratos," Gaskins said. "The company only has gross margins of 33 percent last quarter, you need more for after-tax earnings growth."
Chicago-based Stratos Lightwave (STLW: Research, Estimates) develops and manufactures optical subsystems and components for high data rate networks. Optical subsystems speed the transmission of data by converting electronic signals into optical signals and then back again into electric signals and can be used in different environments, including local area networks and wide area networks.
Stratos sells its optical subsystems and components to optical communication original equipment manufacturers. Three large customers accounted for 44 percent of Stratos' sales for the fiscal year ended April 30, 2000. Cisco Systems Inc. accounted for 26 percent, Nortel for 10 percent and Alcatel for 8 percent.
Methode Electronics, Stratos' parent company, will own about 86.1 percent of the outstanding shares of Stratos common stock after the offering. Stratos plans to use the IPO's net proceeds for general corporate purposes and to repay debt.
For the fiscal year ended April 30, the company reported net income of $3.8 million on revenue of $73.2 million, compared with net income of $3.5 million on revenue of $46.5 million for the 1999 fiscal year.
Stratos competes against heavyweights such as Agilent Technologies Inc., Finisar Corp., Infineon Technologies Corp., and International Business Machines Corp.
Click Commerce Inc. gained 76 percent on its first day. The company raised $50 million after pricing five million shares at $10 each through underwriters led by Morgan Stanley Dean Witter. Price talk was five million shares at $9 to $11 a share.
The Chicago-based Click Commerce (CKCM: Research, Estimates) caters specifically to manufacturers involved in business-to-business sector. Click Commerce offers software and services to distributors, dealers and other distribution channel partners.
Click Commerce builds extranets that lets customers, such as Motorola, American Standard and Bombardier Capital, securely transact business over the Internet with each other and other manufacturers.
The company plans to use net proceeds for working capital and general corporate purposes, including expanding its international presence, for business development and to improve product technology.
eFunds runs out of steam
Finance-related deals continued to languish in the IPO market Tuesday, as eFunds Corp. traded flat. efunds raised $71.5 million after pricing 5.5 million shares at $13 each, below the range, through underwriters led by Lehman Brothers. The deal came in below the expected 6.25 million shares at $14 to $16 each.
Milwaukee-based eFunds Corp. (EFDS: Research, Estimates) offers electronic debit payment products to financial institutions, retailers, e-commerce providers and government agencies.
Deluxe Corp., a provider of check printing services and parent company of eFunds, will own 86.5 percent of eFunds' outstanding shares after the IPO.