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IPOs hope to weather storm
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October 7, 2000: 7:30 a.m. ET
Forces combine to make strong first-day gains difficult
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NEW YORK (CNNfn) - Much like drivers in stormy weather, analysts expect IPO investors to tap on the brakes a bit this week as they attempt to navigate through an increasingly turbulent market that has slowed, but certainly not stopped, the forward momentum of the new issues market recently.
The IPO market has been enjoying a resurgence after its late summer lull, buy analysts said the combination of large lumbering deals, continued pressure on the Nasdaq composite index and the long weekend typically do not bode well for big opening days.
According to Dan McCarthy, analyst with IPO.com, technology companies are playing it cool until the market looks more receptive and even stocks in the hot networking sector have had trouble sustaining their early gains.
Looking for a complete list of this week's IPOs? Click here
"There's a bit of a cautious mood in the IPO market," McCarthy said. "People who got burned by dot.com fever last year and early this year are being more careful. There has also been deflation lately in a lot of optical network stocks."
Still, the market jitters did little to hold down this week's IPOs. Retailer Coach Inc. (COH: Research, Estimates), optical component manufacturer Oplink Communications Inc. (OPLK: Research, Estimates) and biotech software company Informax Inc. (INMX: Research, Estimates) were among those that posted solid, if unspectacular gains on their first days of trading.
(Click here for full IPO coverage from CNNfn.com.)
 In all, nine companies made their made their market debuts this week, raising $1.86 billion, according CommScan Inc., a New York-based investment banking research firm. CommScan expects 18 initial public offerings this week hoping to raise $5.98 billion.
John Fitzgibbon, IPO analyst with WorldFinanceNet.com, said the success of this week's IPOs all comes down to the Nasdaq market, which heavily influences the performance of new issues and just finished its fifth consecutive week of decline.
"The Nasdaq composite is getting thumped and that is taking its toll on the market," Fitzgibbon said. "There are a couple of foreign deals on the calendar, big in size, and none of them will be market movers."
China Petroleum taps the market
China Petroleum & Chemical Corp. is the largest IPO of the week, with the company looking to raise about $3.3 billion, but investors shouldn't expect a first-day gusher.
According to analysts, high number of shares and a high price makes it tough to eke out any first-day gains.
"When a deal is this large the yield tends to be muted," McCarthy said.
China Petroleum, the largest refiner and petrochemical company in China and one of the largest in Asia, plans to price more than 159 million American Depositary Receipts between $18.98 and $22.95 per share.
Asian deals have suffered recently on the IPO market, including Friday's debut of Asia Global Crossing (AGCX: Research, Estimates), but energy deals, such as last week's The New Power Company (TNPC: Research, Estimates), have garnered attention from rapidly increasing energy prices.
The company had sales of more than $18 billion in 1999 and earned more $908 million.
China Petroleum will trade on the New York Stock Exchange as "CPCC" and the deal is co-led by Morgan Stanley Dean Witter and China International Capital Corp.
Swedish broadband
Another foreign deal, but one which could perform well under the right conditions, is Swedish broadband company B2 Bredband AB.
B2 Bredband offers network access and broadband services to residential and small- and medium-sized business customers. Led by Morgan Stanley Dean Witter and ABN AMRO Inc., the company hopes to raise about $411 million.
"This company is basically a Swedish version of Asia Global Crossing but without the financial trouble," McCarthy said.
Asia Global Crossing (AGCX: Research, Estimates) debuted last Friday and saw a gain of only 38 cents to $7.38. The company raised only 60 percent of the $800 million first anticipated with the offer.
B2 Bredband expects to float 29 million American Depositary Receipts and price them between $11.65 and $16.71 on the Nasdaq under the symbol "BRED."
MCE could shine
This week's big gainer could come from, MCE Companies Inc., which analysts said may have the right combination for a good first day.
Ann Arbor, Mich.-based MCE makes mobile and fixed wireless infrastructure equipment, and while that is a competitive market the company managed a profit 1999.
"The company looks attractive because of its strong revenue, and of course it's in a hot sector," said Michael Falbo, analyst with IPOPros.com.
In 1999 MCE had revenues of $64.6 million and earned $250 million. The company will trade on "MCEI" on the Nasdaq and plans to price 8,772,200 shares between $13 to $15 through lead underwriter Deutsche Banc Alex. Brown.
According to its SEC filings, MCE will use the proceeds to pay off dept and generate capital for possible acquisitions.
Another sector proving a consistent performer is biotechnology IPOs, particularly concerning genes, and Introgen Therapeutics fits that category perfectly.
Introgen is developing gene therapy products to fight cancer. It is entering phase three of testing its lead products, which is designed to reduce tumors by enhancing a naturally occurring gene.
"We expect about a $2 premium," said Falbo. "It's a cancer treatment, so there's obvious good potential there, and biotechs have done well on their first day."
Austin, Texas-based Introgen plans to raise about $65 million, pricing 5 million shares between $12 and $14 on the Nasdaq through SC Cowen. The company will trade as "INGN." 
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