Tech Industry

THE DAY AHEAD: IPO pipeline slims down

COMMENTARY -- When one of the most anticipated IPOs for 2000 -- Verizon Wireless -- is postponed because of choppy market conditions, you know there's a slew of weaker companies about to fall out of the new issue pipeline.

Verizon Wireless, the offspring of Verizon (NYSE: VZ) and Vodafone (NYSE: VOD), said last week that volatile markets "created an environment in which it is prudent to defer the offering."

If Verizon Wireless can't make it to market, who can?

Simply put, a shaky stock market has put the kibosh on what was expected to be a $5 billion to $10 billion powerhouse of an initial public offering. The primary reason for the delay is that telecommunications carriers don't look so hot to investors. AT&T (NYSE: T) has been thumped and its AT&T Wireless (NYSE: AWE) tracking stock hasn't been awe-inspiring. Both stocks trade near 52-week lows.

"There's going to be a rotation of out-of-favor sectors," said Randall Roth, an analyst with Renaissance Capital, an IPO tracking firm. "It's a fear based reaction to the market."

In Roth's view, fiber-optic related IPOs will continue to be hot, but everything else will remain dicey.

Idealab!, the Internet incubator behind eToys (Nasdaq: ETYS), definitely falls into the dicey category. Idealab! withdrew its IPO just days after Verizon postponed. The company didn't have much of a shot considering shares of incubators such as CMGI (Nasdaq: CMGI) have cratered.

Roth noted that postponed IPOs and withdrawals are accelerating. Indeed, the list is long. B2 Bredland AB, Smart Link, Tality, ClearWave, Stockpoint, Digital United and YouCentric have postponed IPOs. NetFlix.com and CollegeClub.com are among the growing legions of companies withdrawing IPOs.

These companies that are postponing IPOs may be back again, especially since falling off the IPO calendar isn't the kiss of death it once was. Companies such as Websidestory, which recently postponed an offering, have been issuing almost daily press releases without the shackles of the dreaded quiet period.

Other firms will wait until their sector becomes hot again. One such company could be Transmeta, a hot chip maker. Transmeta's IPO was supposed to go public in mid-October with plenty of buzz. Then came concerns about a semiconductor industry and Intel's profit warning. Toss in a brewing price war between Intel and Advanced Micro Devices and it's no surprise that Transmeta is jockeying for position.

At last check, Transmeta was planning to go public the week of Nov. 6. Don't hold your breath. Transmeta's IPO plans will fluctuate along with those semiconductor market caps.

The week ahead

After last week's earnings barrage, investors may suffer from a little fatigue. Welcome to week two.

There's a smorgasbord of earnings results on tap and some will definitely move entire sectors. We're in for a Super Tuesday of earnings. Here's a look.

  • Oct. 24: Amazon (Nasdaq: AMZN) reports third quarter earnings and expectations are low. First Call consensus is calling for a loss of 33 cents a share. Given that there is no bottom line, you can expect investors to be hanging on the outlook for the fourth quarter. Amazon is a fourth quarter story like most retailers and officials better have something good to say. (Latest column on AMZN)

  • Oct. 24: Compaq Computer (NYSE: CPQ) reports its third quarter results. The big question: How much trouble is Compaq giving Dell? Compaq has clearly been on the turnaround path and could be gaining on Dell, which recently said sales growth wouldn't be up to par. Compaq said last week its inventory situation looked good. Consensus: $0.29. (CPQ stock chart)

  • Oct. 24: Nortel (NYSE: NT) reports its third quarter results and most analysts are expecting good things. Nortel is clearly distancing itself from rival Lucent and could be encroaching on Cisco. All eyes will be on the outlook for this strong fiber optic equipment player. Consensus: $0.16. (Latest column on NT)

  • Oct. 26: JDS Uniphase (Nasdaq: JDSU) is a hot stock in a hot fiber optic component market. The company will be reporting its fiscal first quarter results. Concerns will revolve around whether the company can maintain its torrid growth rate. Consensus: $0.16. (JDSU financials) TDAIN