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IPOs finally return, but quietly
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September 16, 2000: 7:00 a.m. ET
New issues market comes back after summer break; few blockbusters expected
By Staff Writer Luisa Beltran
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NEW YORK (CNNfn) - The new issues market begins its return to life this week after its yearly summer hiatus with A-list underwriter, Credit Suisse First Boston, offering the most anticipated deals.
Analysts expect a hesitant start to initial public offerings as underwriters gauge whether to float their deals in light of broad market volatility. So far in September, the Nasdaq Composite has bounced around, which may cause many underwriters to hedge, analysts said. Companies are also beginning to announce earnings warnings, which could cause further troubles.
Click here for CNNfn.com's IPO calendar
This week, 11 IPOs are expected to raise $1.8 billion, according to data from CommScan, a New York-based investment banking research firm.
"Broad market problems are giving the IPO market concerns," said John Fitzgibbon, editor of WorldFinanceNet.com. "The IPO market's momentum got broken by the holidays. Let see if it can restart."
Wireless again leads the way
Analysts pegged Omnisky Corp. as one of the week's hottest deals. Palo Alto, Calif.-based Omnisky plans to offer 9.1 million shares at $10 to $12 each via underwriters led by Credit Suisse First Boston.
Omnisky offers wireless services that let customers access the Internet, send and receive e-mail, and conduct e-commerce over handheld mobile devices, like a Palm. Omnisky receives content from over 1,000 providers including CNBC, E*Trade, Fox Sports and Yahoo.
The company launched its wireless services nationally in May and already has 21,300 subscribers.
 Still, the company has several attributes that have spelled disaster in the IPO market in recent months. Only a year old, Omnisky lost $40 million for the six months ended June 30 on revenues of $1.2 million. Omnisky competes against some high-profile competitors, including Palm Inc. (PALM: Research, Estimates) through its Palm.net wireless service, AT&T Wireless (AWE: Research, Estimates) services and Verizon Wireless.
But analysts generally like the company's prospects in a competitive sector.
"Basically, this is a portable office," said analyst Mike Falbo, of IPOpros.com, who expects the company to generate a strong premium of $5 or more on its first day of trading. "Omnisky is definitely going to be hot."
However, Corey Ostman, co-chief executive officer of Alert-IPO.com, doesn't believe Wall Street will be buying up huge amounts of the deal.
"The deal has been priced conservatively but it's a relatively large deal," Ostman said. "It will be a solid offering."
Matt Zito, of IPOguys.com, noted that Omnisky's main competitor, GoAmerica Communications Corp (GOAM: Research, Estimates), is trading around $9.25, well below its $16 IPO price.
The wireless service market has yet to develop, Zito said.
"Looking at GoAmerica, why isn't it trading higher?" he said. "Omnisky is a good long-term play but not in the short term."
Omnisky plans to trade under "OMNY."
A gusher
Credit Suisse is also lead underwriter on Chiles Offshore LLC, which operates three of seven existing jack up drilling rigs in the gulf of Mexico. Houston-based Chiles plans to offer 6.5 million shares at $17 to $19 each via underwriters led by Credit Suisse and Salomon Smith Barney.
Chiles Offshore comes in a mature industry and may be better as a long-term hold, analysts said.
"Gas deals don't have the big pops that tech deals do," said Falbo, of IPOpros.com.
But analyst Steve Tuen, of IPO Value Monitor, expects a moderate premium. "The price of oil is still strong so we will continue to see uptick in this business," he said.
Chiles Offshore plans to trade under "COD."
On target
Outside of Credit Suisse's client list, analysts pointed to Inrange Technologies Corp. as one of the strongest deals of the week. Inrange Technologies plans to offer 7.7 million shares at $12 to $14 each via underwriters led by Salomon Smith Barney.
The Mt. Laurel, N.J.-based company makes and designs networking and switching services for storage, data and telecom networks. Inrange targets Fortune 1000 companies such as AT&T (T: Research, Estimates), Wells Fargo (WFC: Research, Estimates), Ford (F: Research, Estimates) and Sprint (FON: Research, Estimates).
Inrange had $98.4 million in revenue and net income of $7.7 million for the six months ended June 30.
SPX Corp. (SPW: Research, Estimates) indirectly owns Inrange and will own 90.8 percent of outstanding shares after the IPO.
Similar IPOs have been winners. On Aug. 9, switch and software provider McData Corp. climbed 200 percent in its first day. The Broomfield, Colo.-McData Corp. (MCDT: Research, Estimates), a unit of EMC Corp. (EMC: Research, Estimates), climbed 57-9/16 to 85-9/16 on the Nasdaq.
However, Tuen, of IPO Value Monitor, is neutral on the Inrange deal because the company's revenues have been relatively flat over the past five years, growing less than 10 percent.
"This is something growth investors will be paying attention to," Tuen said.
Inrange plans to trade under "INRG.
A circuit board sleeper?
Investors looking for a sleeper pick might consider TTM Technologies Inc., which is also getting second looks from analysts. Redmond, Wash.-based TTM Technologies provides manufacturing services for highly complex printed circuit boards.
TTM is offering the relatively rare occurrence of profits in the IPO market. The company earned $16.1 million in operating income on net sales of $88.1 million in first quarter.
TTM boasts a strong customer base of more than 400 customers, including General Electric (GE: Research, Estimates), Motorola Inc. (MOT: Research, Estimates), Ciena Corp. (CIEN: Research, Estimates) and Compaq Computer (CPQ: Research, Estimates).
TTM plans to offer 7.5 million shares at $13 to $15 each via underwriters Robertson Stephens and plans to trade under "TTMI."
John Fitzgibbon touted the deal's solid underwriting but said he did not have huge expectations.
"In the summer, semiconductor manufacturing deals were treated like commodity deals. I don't see TTM plummet but I don't see them quadrupling either," he said.
But Zito believes TTM will be the week's sleeper deal. Kent Adler, TTM's chief executive, was formerly vice president of competitor Tyco.
"Adler obviously knows his business," Zito said. "TTM is also generating a lot of revenue but their net income is not that high."
Small expectations
Analysts have low expectations for Viryanet Ltd., which develops business-to-business software for customers such as EMC Corp. (EMC: Research, Estimates) and Sun Microsystems (SUNW: Research, Estimates).
"Viryanet is trying to compete with Siebel Systems and Kana Communications," Tuen said. "It's a riskier play. We've seen a lot of blowups recently."
Jerusalem, Israel-based Viryanet plans to offer 4.5 million shares at $10 to $12 each via underwriters led by Chase H&Q. The company plans to trade under "VRYA."
A business-to-consumer company is also attempting to float a deal this week. The once hot sector tanked in third quarter 1999 and has yet to rebound. Zengine Inc., a software provider that lets businesses conduct e-commerce, is one of the first B-2-C players to attempt an IPO recently and is not expected to perform well.
Fremont, Calif.-based Zengine Inc. is a unit of MCSi Inc. Zengine began operations in January 1999 and so far 15 companies have used its services.
Wall Street also questions deals that don't have an A-list underwriter. Zengine plans to offer 4.29 million shares at $13 to $15 via underwriters led by William Blair.
"We don't think the IPO market is interested in e-commerce," Ostman, of Alert-IPO, said. "It will be interesting to see if they have to trim the deal down."
Zengine plans to trade under "ZNGN." 
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