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Coach looking to carry IPOs
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October 1, 2000: 5:21 p.m. ET
Leather handbag and luggage company already generating a lot of buzz
By Staff Writer Tom Johnson
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NEW YORK (CNNfn) - What's old is new again in the suddenly resurgent new issues market this week, as several so-called "old economy" companies -- and at least one new economy firm in disguise -- make their market debut amidst the normal abundance of networking and technology deals.
Perhaps the most recognizable name on this week's lineup is Coach Inc., the leather product company being spun off by food and apparel company Sara Lee Corp. (SLE: Research, Estimates). Coach is a decidedly "old economy" firm, selling everything from leather handbags to luggage, but still figures to get a warm embrace from IPO investors, who seemingly have found their stride once again after a long Labor Day holiday.
Click here for a full look at CNNfn.com's IPO calendar
Last week, 20 stocks made their first Wall Street appearance, raising nearly $3.55 billion, according to CommScan, a New York-based investment banking research firm.
The week got off to a torrid start, with a handful of IPOs, including network switching company CoSine Communications Inc. (COSN: Research, Estimates) and Eden Bioscience Corp. (EDEN: Research, Estimates), registering impressive triple digit first-day gains despite the Nasdaq's week-long downdraft.
"The opening premiums were defended because of what we went through earlier in the year, which was a summer-long drought," said David Menlow, an analyst with IPOfinancial.com.
Still, the market's tumble Friday swept up several promising IPOs, leaving analysts a bit more conservative in their projections for the week.
"I think we'll definitely see a lack of performance with some of these deals, said Ben Holmes, president of IPOpros.com. "There are fewer deals and the market just kind of beat people up [Friday]."
This week, 14 companies are lined up at the IPO starting gate, aiming to raise a projected $2.48 billion, CommScan said.
Selling Coach
Though not quite as large a deal as many analysts first expected, Coach, "COH," still aims to raise nearly $111 million in a deal underwritten by Goldman Sachs. The company expects to sell 7.38 million shares at $14-to-$16 per share.
Chicago-based Sara Lee, which hopes to use the IPO as a mechanism to unlock some of the value in its own beleaguered stock price, will retain a roughly 83 percent stake in the New York-based company, although it expects to divest of that interest within 18 months.
Unlike many companies that go public, Coach remains a profitable firm, having earned $38.6 million during its last fiscal year ended July 1, 2000.
"It's a cash cow at this point, so people will definitely nibble at it, but not get overly aggressive with it like they would a technology stock," Menlow said.
The company also has several other factors working in its favor. It follows a number of surprisingly successful retail IPOs this year, including Krispy Kreme Doughnuts (KREM: Research, Estimates) and California Pizza Kitchen (CPKI: Research, Estimates) and, with technology-related stocks increasingly a source of angst for investors, Coach is being viewed as a solid, safe play.
Click here to read CNNfn.com's IPO Focus piece on the old economy boom
"They make a lot of money and they not only distribute the product but they manufacture it as well," Holmes said. "It's a good, old-fashioned play this week."
Coach is not alone among "old economy" firms expecting to take their act to Wall Street this week, although it is expected to be the best performing.
 Also expected to price this week is Empire Financial Holding Co., a financial services firm that provides discount brokerage and trade clearing functions for approximately 80 broker dealers.
Empire Financial, "EFHC," expects to float 2.4 million shares at between $11 and $13 a share. Analysts do not expect the company to generate much of a premium, but it does compete in a financial services sector that has become wildly popular with merger-minded investors.
One new economy firm dressed up in "old economy" clothes is TNPC Inc., "NPW," the power distribution company set up by energy titan Enron Corp. (ENE: Research, Estimates) when U.S. states started deregulating their electricity markets a few years ago.
The Greenwich, Conn.-based company does not actually generate its own power; rather, it sells power purchased from other generating companies through various means, including the Internet.
With energy service companies in hot demand these days, analysts said this company could draw some attention, although the profit capabilities of companies competing in deregulated markets has not yet been proven, which may dampen interest. TNPC hopes to sell 21 million shares at between $18 and $20 per share in a deal led by Credit Suisse First Boston.
Oplink sends strong signal
While Coach may garner the lion's share of the attention this week, the week's hottest deals will likely reside in familiar territory, namely networking, analysts said.
Most analysts said Oplink Communications Inc. possesses the most upside. The San Jose, Calif.-based company supplies components to optical networks and counts Alcatel (ALA: Research, Estimates), Cisco Systems (CSCO: Research, Estimates), JDS Uniphase Corp. (JDS: Research, Estimates) and Lucent Technologies (LU: Research, Estimates) among its top customers.
Though Oplink is still a money-losing operation at this point, having lost nearly $25 million last year, Wall Street is holding optical component manufacturers in high regard these days because of the explosive growth projected in the industry during the next five years.
"It's in an industry that's kind of hard to beat right now," Holmes said.
Oplink, "OPLK," hopes to float 13.7 million shares at $14-to-$16 a piece, raising $205.5 million, in a deal led by Robertson Stephens.
The biotechnology sector, which has been popular of late, offers one deal this week: Kosan Biosciences Inc. The Hayward, Calif.-based firm focuses on creating pharmaceutical products out of organic materials called polykeptides.
Kosan, "KOSN," which lost roughly $4.4 million last year, hopes to raise $75 million selling 5 million shares at $14-to-$16 a piece. Lehman Brothers is serving as the deal's lead underwriter.
Crossing Asia
The week's largest IPO comes from Asia Global Crossing Ltd., "AGCX," the pan-Asia telecommunications carrier that expects to partner with GlobalCenter, a specialist in hosting Internet site infrastructure and managing e-commerce
GlobalCenter, a subsidiary of Web hosting company Global Crossing Ltd. (GBLX: Research, Estimates), was purchased Thursday by Exodus Communications (EXDS: Research, Estimates) in a $6.5 billion deal, but analysts said that was not expected to impede Asia Global Crossing's IPO.
The Bermuda-based company, which was formed via a 1999 joint venture between Global Crossing, Microsoft Corp. (MSFT: Research, Estimates), and Softbank Corp., intends to raise $933 million by selling 62.2 million shares at $14-to-$16 per share. Goldman Sachs is leading the deal. 
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