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Analysts bewildered by tepid semiconductor IPOs

In the first day of trading, one company falls below offering price, another remains little changed and the third posts a moderate gain.

    Three semiconductor companies that launched initial public offerings today stunned analysts and investors with weaker-than-expected performances.

    In first-day trading, shares of Chinese semiconductor firm ASAT Holdings fell below the offering price, while shares of Entegris, which makes transport devices, remained little changed.

    "I'm really surprised that these stocks are doing so poorly because I think the general feeling is that it's still a good industry to be in," said Steven Teun, director of research for the IPO Value Monitor. "The Nasdaq is up. Intel is up. It's pretty strange."

    Meanwhile, a third semiconductor-related company, Axcelis Technologies, posted a gain of 9 percent.

    The relatively flaccid performance of the IPOs was curious considering they appeared to have several elements working in their favor: All three are profitable; the companies operate in the currently hot semiconductor sector; and the IPO market has shown recent improvement.

    In addition, the IPOs coincide with the second day of the weeklong Semicon West, the chip equipment industry's largest trade show. It is taking place in San Jose and San Francisco.

    "From last year to this year, that is probably one of the best performing groups," Eric Chen, senior analyst with Chase H&Q, said of the semiconductor sector. "There's no doubt that these companies can continue to make a profit and continue to grow in this market."

    In the past year, the SEMIndex, comprised of 71 public semiconductor companies, rose 87.7 percent. The three companies launching IPOs this morning all posted a profit in at least the first quarter of 2000, a rarity among the slew of Internet companies that launched IPOs in the bull market of 1999 and soared in first-day trading.

    Axcelis, which makes ion implantation equipment used in the fabrication of semiconductors, posted the best performance today. Its shares initially jumped 61 percent to $35.50 before closing at $23.94.

    Late yesterday, the Beverly, Mass-based company raised $341 million by selling 15.5 million shares to institutional investors at $22 each, the top of the expected price range of $20 to $22.

    Axcelis, a subsidiary of industrial equipment maker Eaton, posted a profit of $19 million on revenue of $143 million in the first quarter. The company is considered a leader in the field of ion implementation, according to Morningstar stock analyst Jeremy Lopez.

    Axcelis trades on the Nasdaq under the ticker "ACLS." Goldman Sachs handled the sale.

    Chinese semiconductor assembly company ASAT Holdings climbed to $12.38 before falling to close 8 percent below the offering price, at $11. Last night, the company raised $240 million through the sale of 20 million American depository shares at $12 each, the middle of its expected price range.

    Last year, the company earned $49.5 million on revenues of $312 million. The shares trade under the ticker "ASTT" on the Nasdaq. Chase H&Q handled the sale.

    Entegris, which manufacturers equipment to safely transport chips, wafers and chemicals, was little changed, ending the day up a mere 19 cents. Last night the company raised $143 million through the sale of 13 million shares at $11 each, the bottom of a twice-lowered price range.

    Entegris originally intended to sell shares in the range of $15 to $17, but reduced the range to $13 to $15 in mid-June. On Monday, the company lowered the expectations again, to $11 to $13 per share.

    "Of course, it would have been nice if it had been at $17, but the market is changing," Entegris COO Jim Dauwalter said. "We adjusted according to the market and now we're moving forward."

    Chaska, Minn.-based Entegris reported $11 million in profit in the first quarter on revenue of $85 million, according to Renaissance Capital. Last year, the company introduced 100 new products and 500 derivative products.

    Dauwalter said the company will invest the proceeds from the offering into new products and facilities. The company trades under the symbol ``ENTG'' on the Nasdaq. Merrill Lynch handled the sale.