SAN FRANCISCO (CNN/Money) -
Engage in conversation in certain circles and it's only a matter of time before you hear the phrase "Google IPO." If and when the company decides to go public next year, it will be a defining moment for the tech sector.
It would be the first tech initial public offering since perhaps Netscape's on Aug. 9, 1995, to garner grandmother-level public awareness. But tech investors shouldn't get stuck waiting for Google like characters in an updated Samuel Beckett play: Plenty of tech companies are testing the waters of the public markets right now, and the IPO market is heating up.
Last week was the best for IPOs in more than a year, with five deals raising $850.3 million. And keeping pace with the overall economy's solid third-quarter growth, IPOs raised $3.1 billion in the quarter, up from $540 million raised in the third quarter of 2002. Dig into the numbers a little and you'll see the technology sector represented in growing figures.
Seven of the 20 IPOs in the third quarter were by tech firms, and the sector is the second most popular this year for IPOs, according to Renaissance Capital's IPOhome.com. Four newly public tech-related firms gained more than 40 percent from their initial price this quarter: Digital Theater Systems (DTSI: Research, Estimates), InterVideo (IVII: Research, Estimates), iPass (IPAS: Research, Estimates), and SigmaTel (SGTL: Research, Estimates).
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So what's coming down the pike for tech investors? With the recent success of the IPO market in general and tech companies in particular, look for companies that planned to go public in the past, but shied away because of the chilly climate, to consider the IPO route again.
Not everyone will be invited to the party, however. "A flight to quality remains the front mission of the Street's investment banking community," says IPO Monitor senior analyst Jeffrey Hirschkorn, noting that 11 of the 20 companies that went public in the third quarter were profitable, and only seven were in the red.
Investors will want to keep their eyes on a few upcoming IPOs in particular, starting with Orbitz, the mammoth online travel company expected to go public later this month. Analysts point out that the regulatory issues surrounding the company have subsided and that it's scoring large corporate travel accounts, such as the recent McDonald's (MCD: Research, Estimates) win.
Tessera Technologies, a relatively small, profitable company that helps in the manufacturing of semiconductor packaging, is expected to fare well in its second attempt at going public. In September the semiconductor industry saw its largest sequential monthly increase in chip sales in 10 years, according to the Semiconductor Industry Association.
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Callidus Software isn't currently profitable, but it makes software in the hot sales-force automation sector. The company's November IPO could be seen as a bellwether for the also-rumored IPO of Salesforce.com.
Even with all this new activity, don't start trolling for used copies of "Day-Trading for Dummies" quite yet. It's important to note that despite the recent successes in the IPO market, and the docket of tech-related offerings expected this month and next year, we're still a long, long way from previous IPO levels in terms of quantity and money raised.
Rich Peterson, a market strategist with Thomson Financial, compares the recent quarter's IPO performance to "a batter going 5 for 5 in a game after going 1 for 40 in the last 10 games." "It's still a subpar batting average," he added.
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