|
IPOs start the week flat
|
 |
July 11, 2000: 5:41 p.m. ET
The most anticipated deal of the week, three others, fail to impress investors
|
NEW YORK (CNNfn) - The initial public offering market stumbled early this week, with three deals falling flat and the most anticipated deal of the week edging up only 8 percent Tuesday.
Axcelis Technologies Inc., a provider of ion implementation equipment, was expected to very well, but ended up rising less than 10 percent after pricing at the top of its range.
Entegris Inc., a provider of materials management services, rebounded to rise 1.8 percent; Turkcell Iletisim Hizmetleri A.S., a mobile phone operator in Turkey, inched up less than 1 percent; and ASAT Holdings Ltd., a provider of semiconductor assembly and test services, continued its freefall, closing below its offer price.
For the week of July 10, 13 initial public offerings are expected to raise $3.1 billion -- with the largest deal from Turkcell raising $1.7 billion, according to CommScan, a New York-based investment banking research firm.
More than half of the companies going public are profitable and analysts had expected the deals to produce stronger performances. However, the dismal results indicate the IPO market has yet to rebound -- with investors less likely to overlook problems, said Irv DeGraw, research director at WorldFinanceNet.com.
"We've had a couple of deals that started to remind us too much of the heady days of first quarter [2000] and fourth quarter [1999]," he said. "Coming back to a muted week is a positive sign because it opens up the opportunity for a later gain."
Analyst Steve Tuen of IPO Value Monitor said recent comments made by Salomon Smith Barney analyst Jonathan Joseph predicting a downturn in the semiconductor sector took its toll on related IPOs.
"Semiconductors are a really hot sector now but there is really caution now because of what the SSB analyst said," Tuen said.
Axcelis up, but doesn't soar
Axcelis Technologies Inc. rose 1-15/16 to 23-15/16. Axcelis raised $341 million after pricing 15.5 million shares at $22 each, the top of the range, through underwriters led by Goldman Sachs.
Analysts had expected the Beverly, Mass.-based Axcelis Technologies Inc. (ACLS: Research, Estimates), a producer of ion implementation equipment used to make semiconductors, to produce one of the week's hottest deals.
 The ion implementation process provides a way to introduce charged ions into the surface of a silicon wafer to form the active components of a semiconductor. Axcelis also provides after-market service and support, including spare parts, equipment upgrades, maintenance and customer training.
While profitable, a spinoff of Axcelis by parent company Eaton Corp. (ETN: Research, Estimates) caused investors to shy away from the deal, DeGraw said.
After the IPO, Eaton will own about 83.8 percent of common stock. Eaton plans to divest itself of the shares it owns within six months of completing the IPO by distributing shares to Eaton shareholders through a splitoff, spinoff or some combination of the both.
"Investors are only buying 16 percent of the company and the remaining will be held by Eaton," DeGraw said. "That's a pretty severe problem."
Adding to the problem, Axcelis plans to use nearly all the proceeds, or $300 million, to pay a dividend to Eaton. The rest, or $41 million, will go for general corporate purposes.
"Had there been not been a carve-out overhang and the company was not planning to given proceeds away, Axcelis would be doing spectacularly better," DeGraw said.
In Japan, Axcelis is a 50-50 joint venture with Sumitomo Heavy Industries Ltd. Sumitomo licenses Axcelis technology and is a leading provider of ion implementation equipment in Japan.
Axcelis is dependent on a small number of customers. In 1999, STMicroelectronics N.V., Motorola Inc., and Texas Instruments Inc. together accounted for 37 percent of net sales.
Axcelis competes against Varian Semiconductor Equipment Associates Inc., Applied Materials Inc., Nissin Electric Co., and Ulvac Technologies Inc.
For the quarter ended April 30, ion implementation sales accounted for more than 80 percent of Axcelis net sales. For the three months ended March 31, Axcelis reported net income of $18.9 million on sales of $143 million, compared with net losses of $10.4 million on sales of $59.1 million for the year-ago quarter.
The first Turkish firm on NYSE
Turkcell Iletisim Hizmetleri A.S., the first Turkish company to list on the New York Stock Exchange, was little changed, rising 0.1 percent to 17-5/8. Turkcell raised more than $1.68 billion Monday after pricing 96 million American depositary receipts (ADRs) at $17.60 each, the midpoint of the range, through underwriters co-led by Goldman Sachs International and Morgan Stanley Dean Witter.
Istanbul-based Turkcell provides mobile communications services in Turkey and has about 68 percent of that nation's total mobile market, the company said in a filing with the Securities and Exchange Commission. Turkcell (TKC: Research, Estimates) also provides services to customers in 87 countries through roaming agreements with 173 operators.
Founded in 1993, Turkcell operates a GSM mobile communications network in Turkey and had 6.2 million customers on March 31. Founding shareholder Sonera Holding B.V., an international provider of mobile voice and data, will hold a 13.07 percent stake after the IPO, while Cukurova Holding A.S., a Turkish conglomerate, will have 8.12 percent. Turkcell Holding A.S. will own 51 percent.
Turkcell will not receive any proceeds from the sale of ordinary shares or ADRs. Selling shareholders will receive all the proceeds, the company said.
For the three months ended March 31, the company reported operating income of $143 million on total revenue of $478.6 million, compared with operating income of $107.3 million and revenue of $288.6 million a year earlier.
More semiconductors
Entegris Inc. rose 3/16, or 1.7 percent, to 11-3/16 after raising $143 million. The company priced 13 million shares at $11 each, the bottom of the range, through underwriters led by Merrill Lynch. The deal has been cut twice, from the originally filed 13 million shares at $15-to-$17 each to $13-to-$15 and then down to $11-to-$13.
Chaska, Minn.-based Entegris (ENTG: Research, Estimates) provides materials management services to the microelectronics industry, particularly the semiconductor sector. Entegris makes products, including a group of valves and pipes, to protect the critical materials used to make semiconductors.
The company plans to use the net proceeds from the IPO to retire debt, for working capital and general corporate purposes, including sales, marketing, customer support and other activities.
For the nine months ended May 31, Entegris reported net income of $35.4 million on sales of $247.7 million compared with net income of $2.5 million on sales of $172.2 million a year earlier.
ASAT Holdings fared even worse, falling below its offer price. ASAT slid 1, or 8.3 percent, to 11.
ASAT Holdings (ASTT: Research, Estimates) raised $240 million after pricing 20 million American depositary shares at $12 each through underwriters led by underwriters Chase H&Q, Donaldson Lufkin & Jenrette and Salomon Smith Barney. Each ADS represents five ordinary shares. Price talk was 20 million ADRs at $11-to-$14 each.
The Hong Kong-based ASAT, one of the world's largest independent providers of semiconductor assembly and test services, offers a selection of semiconductor packages. Semiconductor packages protect the enclosed semiconductor chip and provide a network of connections between the chip and a printed circuit board. 
|
|
|
|
|
 |
|
