Charter Communications, a cable company owned by Microsoft cofounder Paul Allen, is seeking to raise $3.23 billion. Additionally, Microsoft is spinning off its online travel site Expedia--marking the first time the software giant has spun off one of its operations in an IPO.
Those two offerings will help make next week one of the largest ever as measured by the amount of capital raised. Although Charters' IPO is a whopper, it will be dwarfed by United Parcel Service's sale next week of 109 million shares for about $42, raising $4.6 billion.
Charter's IPO is expected to price Monday and begin trading Tuesday under the ticker "CHTR."
The company plans to float 170 million shares at $17 to $19 a share. Goldman Sachs is the lead underwriter.
"I wouldn't be surprised if Charter's shares rise 100 to 150 percent on its first day," said Jeff Hirschkorn, a senior analyst for IPO.com. "Paul Allen is building this company from the bottom and he's doing it with acquisitions. Right now the company is the seventh-largest cable company but will be the fourth largest after it completes its acquisitions."
In an usual move, the 170 million shares that will be sold also will represent all the outstanding class A common stock outstanding. Allen will hold 50,000 shares of class B common stock, which gives him 10 voting rights for each share and 95 percent of all voting rights. The class B shares can later be converted to class A shares on a 1-for-1 basis.
Allen's investments are handled through Vulcan Ventures. His reputation as an astute investor and Microsoft's ability to grow its business into a multibillion dollar empire may be an attractive combination for investors considering shares in Charter and Expedia, Hirschkorn said. (Vulcan Ventures is an investor in CNET, publisher of News.com.)
Charter's debut will be closely watched by Wall Street. The company's debut had previously been expected in September, but was delayed.
Charter generated revenues of $1.43 billion during the six-month period ended June 30 and it posted a loss from operations of $238.7 million.
Expedia also is expected to capture investors' attention next week. Hirschkorn said the company's shares could gain more than 100 percent on the first day.
Expedia is expected to price on Wednesday and begin trading Thursday under the ticker "EXPE."
Expedia hopes to raise up to $62.4 million, based on the high end of its $10 to $12 pricing range and the 5.2 million shares it will sell. Goldman Sachs is the lead underwriter.
"I can see them raising the range to $15 to $17 a share," Hirschkorn said. "One thing I like about the company is they are growing rapidly and in a market that is growing. This is a deal to ride."
He noted, however, that competitor ebookers.com also is going public next week. Although that company has also posted substantial growth, ebookers.com is not expected to take attention away from Expedia, Hirschkorn said.
After the sale, Microsoft will hold an 86.4 percent stake in the company after the IPO. The travel site will continue to maintain several agreements with Microsoft, such as its position on the MSN Web site. Microsoft has agreed not to compete with the company for three years.
Expedia generated revenues of $15.3 million for the three months ended September 30, compared with $6 million a year ago. The company's loss from operations shrank to $4.95 million in the quarter from $5.2 million a year ago.
Other companies scheduled to launch IPOs next week include Sage and Finisar.
Sage, which provides accounting and business software solutions for small to medium-sized businesses, plans to raise up to $30 million, based on the high end of its $8 to $10 a share pricing range and the 3 million shares it plans to sell.
The company plans to price Wednesday and begin trading Thursday under the ticker "SAGI." Robertson Stephens is the lead underwriter.
"I think it will do OK. They may increase their range to $10 to $12 a share," Hirschkorn said. "I think it may have about a 70 percent gain on its first day."
The company is among the latest to roll out Web hosting services, helping customers manage database and e-commerce tasks.
Sage, during a six-month period that ended Sept. 30, generated revenues of $7.5 million, compared with $1.3 million a year earlier. The company posted a net loss of $4 million for the period, up from a loss of $2.6 million a year ago.
Finisar, which provides high-speed data communications over local and storage area networks, plans to raise up to $107.8 million, based on the high end of its $12 to $14 pricing range and 7.7 million shares it will sell.
The company plans to price Thursday and begin trading Friday under the ticker "FNSR." Merrill Lynch is the lead underwriter.
"This deal should get some interest. They picked the right time to go public, because the following week their competitor Agilent Technologies is expected to go public," Hirschkorn said.
During the three-month period ending July 31, the company generated $13.9 million in revenue, up from $6.8 million the previous year. Meanwhile, its net income remained largely flat at $1.25 million, compared with $1 million a year ago.