|
Markets hold fate of IPOs
|
 |
October 14, 2000: 7:45 a.m. ET
Strong deals on calendar, but volatility in Nasdaq could hamper offerings
By Staff Writer Kim Khan
|
NEW YORK (CNNfn) - As Wall Street roiled with uncertainty the last few weeks, one thing remains constant in the initial public offering market: Only the strong will survive. Analysts said that axiom will hold truer than ever this upcoming week, where they expect few phenomenal first-day gains, but several good long-term value plays.
Irv DeGraw, research director with WorldFinanceNet.com said there are solid companies scheduled to debut next week, but warned a lot will depend on whether the markets can extend, or at least hold on to, Friday's gains.
"Any further volatility will pretty much dry this thing up," DeGraw said. "Last week we said if we got half the deals out and none of them broke it would be a miracle. There was no miracle."
According to financial research company CommScan, 18 offerings were scheduled to be priced last week, but only 7 actually made it to the market, raising $3.6 billion. This week 14 deals are at the starting gate, hoping to raise $3.04 billion.
One for the portfolio
Clearly, the most well-known and perhaps most solid deal, at least from a financial point of view, is agricultural tech company Monsanto, which specializes in gene manipulation of food. The company is hoping to raise $787.5 million, selling 35 million shares between $21 and $24.
Monsanto traded on the New York Stock Exchange before it was bought by Pharmacia and Upjohn -- now Pharmacia -- in 1999. Pharmacia is offering 14 percent of the company on the market.
"This isn't going to make a big splash (on its first day), but it's a portfolio builder," DeGraw said.
He said the company is a great combination of old economy, new economy and profitability.
"The stock is paying a dividend, which is almost unheard of now," he said. "The growth isn't that great, but when you're a $5 billion company growth is a little hard to come by."
Monsanto had revenues of $5.25 billion in 1999 and earned $150 million. The deal is led by Goldman Sachs and Salomon Smith Barney and the stock will trade as "MON" on the New York Stock Exchange.
Check out CNNfn.com's upcoming IPO page here
Another strong portfolio contributor may be French telecom company Alcatel's tracking stock for its optical networking division - one of the premier sectors for IPOs right now.
Because the company is based in France, details normally available from SEC filings are hard to come by, but the company is hoping to raise about $1.3 billion in a very pricey offering.
Alcatel Optronics plans to sell 16.5 million shares at between $74.85 to $88.06, a price that targets the offering almost solely at institutional investors.
Led by Morgan Stanley Dean Witter Alcatel Optronics' American depositary shares will trade as "ALOA" on the Nasdaq.
Love that sector
The week's biggest gainer could turn out to be Calabasa, Calif.-based Ixia, analysts said. Optical networking is still the darling of the IPO market and Ixia has a strong foothold in testing equipment for those networks. Plus, in an unusual twist, it also boasts a profitable bottom line.
 "They're in the right sector with the right fundamentals," DeGraw said. "They are on a pace to make $56 million this year, with 200 percent growth, so they're in hypergrowth [mode] right now and they're profitable. That is really exceptional."
In 1999, Ixia had revenues of nearly $25 million and profits of $4.8 million. The company plans to use the $60.5 million it expects to raise for general corporate purposes, with an eye to acquisitions of products or businesses.
Ixia hopes to price 5.5 million shares between $10 and $12 under the symbol "XXIA" on the Nasdaq. Merrill Lynch is the lead underwriter.
According to DeGraw, one sleeper could be oil and gas exploration company Westport Resources because of the recent interest in energy prices and stocks.
Denver-based Westport plans to raise $128 million, selling 8 million shares between $15 and $17 through lead underwriter Credit Suisse First Boston. It will trade as "WRC" on the New York Stock Exchange. 
|
|
|
|
|
 |
|
