Charter Communications, Paul Allen's cable company, opened at 20 1/2 Tuesday after pricing its shares at $19 a pop. The company is one of the whoppers among this week's offerings, which also includes Expedia, the spin off of Microsoft's online travel business, and United Parcel Service, a back-door e-commerce stock.
Charter Communications (Nasdaq: CHTR), the fourth largest cable TV operator in the U.S., was up 1 13/16 to 20 13/16. The first-day performance wasn't surprising given Charter's outstanding shares. The company priced 170 million shares and analysts said that float would limit gains. The company competes with AT&T (Nasdaq: T), Comcast (Nasdaq: CMSCK) and Cablevision (NYSE: CVC) among others.
Goldman Sachs is the lead underwriter, and Bear Stearns and Morgan Stanley are co-managers.
"This deal is highly anticipated," said Peony Kao, an analyst for Renaissance Capital, "especially since Paul Allen was on the cover of Forbes."
"It's been very acquisitive and it is very large," Kao said. The company will reach 9.7 million homes, and see a subscriber base of 6.2 million. Aside from the company's reach, access to Paul Allen's other entities, such as Wink Communications (Nasdaq: WINK) and Worldgate is the company's strong point.
Following the offering, Allen, co-founder of Microsoft, will control approximately 95 percent of the voting power of Charter. Allen has also pumped more than $2 billion into Charter. In fact the company, risks access to Allen's money as one of its risks to the Charter's future.
Charter's revenue growth is hard to figure out since the company is a "roll-up," Kao said. The pro-form figure for the fiscal year 1998 show the company at $2.7 billion in revenue. Charter also had revenue of $1.4 billion, and a loss of $266,000, for the six months ended June 30.
"The prospectus is very confusing" said Francis Gaskins of the IPO Desktop, who suggested individual investors would need a guided tour in order to figure out the company's financials. "It's impossible to do an anlaysis, to figure out what the trend figures are," he added. But Gaskins predicts the Paul Allen name will draw a sizeable crowd.
Among other IPOs Tuesday, Netzee (Nasdaq: NETZ) , which provides private label telephone and Internet banking to community banks, was up 1 13/16 to 15 13/16, a gain of 12 percent. The company offered 4.4 million shares at $14 each, the top of its $12 to $14 range.
Robinson-Humphrey is the lead underwriter, and J.C. Bradford and Suntrust Equitable will act as co-managers.
Gaskins said Netzee was one of the more highly priced offerings, based on a calculation which divides the company's most recent quarter's revenue into its IPO market cap.
The company racked up a net loss of about $45.8 million for the year ended December 31, and approximately $23.5 million for the six months ended June 30, 1999. For those six months, the company brought in just $2.1 million in revenue.