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IPO interest sours
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June 23, 1998: 11:56 a.m. ET
After a sweet first quarter, interest in initial public offerings has slowed
From correspondent Charles Molineaux
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NEW YORK(CNNfn) - For initial public offerings charging into the market, the bull run has slowed.
For the first four months of this year, winners -- IPOs that closed the first day above their issue price -- outnumbered losers 5-1/2 to 1. But since the end of April, the winner-loser ratio has been almost even.
Tom Taulli, an IPO analyst, says the drop in IPO interest is directly related to the current state of the market. "When the general market gets a cold, the IPO market gets pneumonia. It's that kind of relationship."
Analysts say as the more speculative investments, initial offerings lead strong markets but lag in weak ones. And interest in IPO has dried up to the point that companies rethink their plans to go public.
John Fitzgibbon, editor of IPO Aftermarkets, said he's seen the effect the market has had on initial offerings. "We have seen an increase in postponements or cancels due to market conditions. That's now starting to become more commonplace than it was three months ago," he said.
Internet offerings are the striking exception. Of the increasingly rare moonshots, half have been Web-related. The promise of the next Yahoo! or Amazon.com still excites investors and recent forays into the Net from media giants like NBC and Disney help.
IPO watchers doubt the choppy market will last. They say this could be a buying opportunity, especially for investors normally shut out of initial offerings.
Kathleen Smith, fund manager at Renaissance Capital, agrees. "Longer term, this is a good time to look at those IPOs and either attempt to obtain shares on the offering or be able to buy in the after-market." (152 KB WAV or 152 KB AIF)
Analysts say a turnaround should come when jitters over the Asian market subside and the market crawls out of its summer doldrums. But a select few landmark offerings, such as Goldman Sachs expected this fall, will generate their own excitement, regardless of the rest of the landscape. 
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