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IPO plate spilling over
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July 30, 2000: 7:00 a.m. ET
Although 41 deals are being served up this week, few are expected to sizzle
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NEW YORK (CNNfn) - Despite a week of mixed results, the armada of initial public offerings is expected to continue sailing into the rough market waters.
This week, 41 deals are expected to raise $4.1 billion, the largest number of deals on the calendar since August 1996, according to CommScan, a New York-based investment banking research firm.
"Basically what's happening in IPO's is it's a momentum play in that the Nasdaq had a good run from trough to peak, from late May to recently, of about 40 percent," John Fitzgibbon Jr., an IPO analyst with WorldFinanceNet.com, said. " The IPO market is like a lumbering battleship. It takes a while to gear it up. It takes a while to slow it down. So what has happened is the IPO market is catching up to the Nasdaq composite where it was a couple of weeks ago."
While the market will be bombarded with deals of varying quality, only a few are equipped with the right armor to put up a strong front.
Street could "Resonate" with profits
Resonate Inc. has the power to bring good vibes to Wall Street despite posting a $19 million loss in 1999.
The Sunnyvale, Calif.-based company makes e-business software that competes directly with Cisco Systems (CSCO: Research, Estimates) and Microsoft (MSFT: Research, Estimates).
"The deal is heating up and it's all predicated on supply and demand," Fitzgibbons said. "It's not a particularly large deal, but its business is in the flow of the momentum. One thing you have to remember is the IPO market was born on sizzle. Then we get down the road and the question becomes is that piece of meat a steak or an old dead cow?"
Resonate posted $9.9 million in revenue last year, but lost $19 million. Goldman Sachs is the underwriter and the company will trade on the Nasdaq as RSNT.
Resonate plans to price 3 million shares between $15-$17, raising about $48 million.
OPNET Technologies is another piece of filet mignon as far as Fitzgibbons is concerned.
The Washington, D.C.-based company makes network management software that is supposed to help prevent glitches before they happen.
OPNET had sales of $12 million and a net income of $207,000 in fiscal 1999. And in an evolving field, the company has the potential to put up a strong showing.
Ben Holmes, president of ipoPros.com, also likes OPNET because of the demand for products in this sector.
OPNET's underwriter is Morgan Stanley Dean Witter and the stock will list on the Nasdaq as OPNT.
The company will be pricing 4 million shares between $12-to-$14 each to raise about $52 million.
Adding to the IPO excitement, Speechworks International, a producer of voice-activated technology, has potential in an emerging field even though it posted a loss last year.
The Boston, Ma.-based company posted a net loss of $15.4 million in 1999 with sales of $14 million.
The company is scheduled to price about 4.8 million shares between $13-to-$15 to raise about $66.5 million.
It will trade on the Nasdaq as SPWX, and Chase H&Q is the lead underwriter.
When the moon hits your eye...
California Pizza Kitchen is a favorite of Holmes' because it's pizza, it's popular, and he views it in the same vein as Rubios and Krispy Kreme.
The Los Angeles-based restaurant chain had 1999 sales of $179.2 million and net income of $5.4 million.
The company expects to price 5.3 million shares between $13-to-$15 to raise about $74.2 million.
It will trade on the Nasdaq as CPKI and the lead underwriter is Banc of America.
Another big name due out this week is America Online Latin America, the Ft. Lauderdale, Fla.-based subsidiary of Internet titan AOL (AOL: Research, Estimates).
The company, in conjunction with investment concern The Cisneros Group, aims to bring AOL-branded services to Latin American countries beginning with Brazil, Mexico and Argentina.
But analysts are expecting a modest response at best from investors. Despite boasting the strength of AOL's brand name, analysts said the company faces stiff competition and higher tariffs in the Latin American market, hindering its potential growth.
AOL Latin America, which will trade under the ticker AOLA, hopes to float 25 million shares at between $15 and $17 per share in a deal co-managed by Salomon Smith Barney and Donaldson, Lufkin & Jenrette.
Biotech beauty
Lion Bioscience is another pick that Fitzgibbon likes because of the strength of the biotechnology sector
The Heidelberg, Germany-based life sciences company expects to price 4.6 million shares between $35.25 and $41.92 and raise about $175 million.
The company will trade on the Nasdaq as LEON and Morgan Stanley is the underwriter.
Western Multiplex Corp., a Sunnyvale, Calif.-based broadband telecommunications equipment provider is another target in Fitzgibbons' periscope.
The company reported net income of $1.2 million in 1999 on revenue of nearly $45 million.
Western Multiplex plans to price 7.5 million shares between $10-to-$12 to raise about $82.5 million.
It will trade on the Nasdaq under the symbol WMUX and its lead underwriter is Salomon Smith Barney.
Another favorite is H Power Corp. The Clifton, N.J.-based company develops and produces environmentally clean and energy-saving electricity through proton exchange membrane (PEM) fuel cells.
Holmes said the IPO is "a little laggard," but the technology is cutting edge.
H Power had sales of just over $1 million in 1999 with a net loss of $6.3 million.
The company expects to price 7 million shares between $11-to-$13 to raise about $84 million.
It will trade on Nasdaq under the symbol HPOW and Lehman Brothers is the lead underwriter. 
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