|
Investors grab Coach sale
|
 |
October 5, 2000: 5:12 p.m. ET
Leather goods firm, electric provider TNPC do well
|
NEW YORK (CNNfn) - Leather goods company Coach Inc. took its patented story to Wall Street Thursday and drew rave reviews from the new issues market, although an online seller of electricity received an even greater surge.
New York-based Coach (COH: Research, Estimates) rose $4.31, or 27 percent, to $20.31 -- continuing the momentum it built Wednesday evening when it priced 7.38 million shares at $16 each, the high end of its range, in its initial public offering.
The Coach offering has been closely watched by analysts, who predicted a strong reaction from investors. Though a so-called "old economy" firm, the producer of products ranging from wallets to luggage boasts a strong balance sheet -- an increasingly important attribute for IPO issues.
It also follows a number of other highly successful retail-oriented IPOs.
Investors gobbled up shares of Krispy Kreme Doughnuts (KREM: Research, Estimates) when it made its debut in April, sending the stock up 75 percent to $37 per share on its first day. The stock closed at $89.06 Wednesday. That offering was followed by a 35 percent first-day increase for California Pizza Kitchen (CPKI: Research, Estimates) in August.
"We had a brand name come out and it came out according to script," said John Fitzgibbon, IPO analyst at WorldFinanceNet.com. "Other brand names like Donna Karen and Polo Ralph Lauren did well on their first day."
"What the underwriters do is discount them off the current market [valuation], which entices institutional investors to come in and sop up all the stock," Fitzgibbon said.
Coach parent company Sara Lee Corp. (SLE: Research, Estimates), which retains a roughly 83 percent stake in the company but has committed to selling its interest entirely within a year, decided to take the company public as a mechanism to unlock some of the value in its own beleaguered shares.
But rumors have also surfaced that the company might look to sell Coach outright as well. The chairman of crystal goods maker Waterford Wedgewood said his company would be interested in purchasing the leather goods subsidiary, although it gave no indication it had opened formal negotiations.
Coach CEO Lew Frankfort told CNNfn Thursday he would not comment on the merger rumors.
"We're thrilled to be a public company," he said. "We've been waiting for this for a long time. We view this as a coming of age for us."
Shares of Sara Lee rose 31 cents to $19.87.
TNPC sparks
IPO investors also gave energy provider TNPC Inc.'s stock a jolt in early trading, sending the company's shares up nearly 29 percent -- higher than some analysts expected.
TNPC (NPW: Research, Estimates), which stands for The New Power Co., climbed $6 to $27. The company priced 24 million shares at $21 per share late Wednesday evening, exceeding its expected $18-to-$20 range.
"It's energy related and that's one of the active sectors," Fitzgibbon said.
Click here to read CNNfn's IPO Focus piece on TNPC Inc.
TNPC is a subsidiary of power leader Enron Corp. It aims to become the United States' first nationwide provider of electricity and natural gas by selling customers electricity in deregulated markets over the Internet at below-market price.
Analysts were mixed on the offering's prospects, primarily because it is the first of its type to go public, but did note energy-related sales have performed well on Wall Street recently.
Advanced Switching heads higher
Vienna, Va.-based Advanced Switching Communications rose 20 percent, another good debut for one of the market's favorite sectors.
Advanced Switching (ASCX: Research, Estimates) rose $3 to $18. The company's broadband platform software enables businesses to transmit voice, data and multimedia traffic cheaper.
The company raised $93.75 million after pricing at the top of its range.
"Looks like a lot of the sparkle is coming out of the higher-tech issues," Fitzgibbon said. "For the reason, look no further than the fall in the Nasdaq."
The Nasdaq composite index fell 51.01 to 3,472.09.
The remaining new issue, Kosan Biosciences (KOSN: Research, Estimates) remained unchanged at $14. Kosan, which focuses on creating pharmaceutical products out of organic materials called polykeptides, raised $70 million after pricing at the bottom of its range. 
|
|
|
|
|
|
Coach Leather Goods
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
