Of the 14 companies scheduled to launch IPOs this week, only seven made it to the market, according to New York-based market research firm CommScan. Those that did begin trading showed an average first-day gain of 8.47 percent, considerably less than this year's average of 56 percent.
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In addition, companies that have recently launched IPOs have received a tepid reception. Nearly half, or 198 of 401 new issues, are trading below their offering price this year, according to Thomson Financial Securities Data. Analysts say the result will be that investors will expect more discounts than they have in the past.
"Because of the downturn, there's going to have to be even better incentive to buy," said Matt Zito, co-founder of IPOguys.com. "I wouldn't be surprised to see a lot of companies lowering their price ranges. We might even see withdrawals."
Despite these conditions, 14 companies have lined up to raise a total of $3 billion next week, with much of the money coming from two companies: Alcatel Optronics and Monsanto.
Paris-based Alcatel Optronics, which makes optical components for telecommunications networks, is the biggest deal scheduled for next week. With the offering, which is a tracking stock for telecom giant Alcatel, the company plans to raise as much as $1.45 billion through the sale of 16.5 million shares at a range of $74.85 to $88.06.
Although there is still strong demand for companies in the optical networking sector, some analysts question whether Alcatel will be able to demand such a high price given the conditions of the broader market.
"It's a huge offering, and the share price is relatively high," said Steven Tuen, a fund manager with the Kinetics Internet Fund. "I think investors are going to be kind of skeptical."
Alcatel has applied to trade on the Nasdaq under the ticker symbol "ALAO." Morgan Stanley Dean Witter will handle the sale.
Monsanto, the second-biggest company on the calendar this week, assists in crop growing by applying biotechnology, genomics and molecular breeding technology to herbicides and seeds. The St. Louis, Mo.-based company plans to raise as much as $840 million through the sale of 35 million shares at a range of $21 to $24. Monsanto has applied to trade under the ticker symbol "MON." Goldman Sachs will handle the sale.
Tuen expects this offering to inspire little enthusiasm, partially because the patent on the company's key product expired in September.
In fact, analysts
"There's just not much appetite for new issues when the broader market is like this," said Richard Peterson, an analyst with Thomson Financial Securities Data.
Other companies scheduled to begin trading this week include:
Ixia, which evaluates the quantity and speed of transmission of data packets, how many packets are lost during transmission, and whether the packets are received intact. The Calabasas, Calif.-based company plans to raise as much as $66 million through the sale of 5.5 million shares at a range of $10 to $12. Ixia has applied to trade on the Nasdaq under the ticker symbol "XXIA." Merrill Lynch will handle the sale.
Cquential helps clients with mobile commerce and content distribution over digital networks. The Cambridge, Mass.-based company plans to raise as much as $109.5 million through the sale of 7.3 million shares at a range of $13 to $15. Cquential has applied to trade on the Nasdaq under the ticker symbol "CQTL." Lehman Brothers will handle the sale.
Endwave, which designs components for broadband wireless systems, plans to raise as much as $90 million through the sale of 6 million shares at a range of $13 to $15. Sunnyvale, Calif.-based Endwave has applied to trade on the Nasdaq under the ticker symbol "ENWV." Deutsche Banc Alex Brown will handle the sale.