After a midsummer blip in the technology stock market that derailed several companies' plans to go public, IPOs are back in fashion and high-tech offerings are drawing more interest than ever.
Initial public offering analysts say 30 to 45 IPOs are scheduled to hit Wall Street this week alone. Of these, about 40 percent will be technology firms. The market for IPOs this year is already nearing the lofty level of 1993, when public offerings raised $34 billion.
"During the third quarter, one out of six deals were for technology IPOs. Now, it's one in four," said Richard Peterson, an IPO analyst with Securities Data.
But the renewed IPO fever does not mean that investors should rush to buy into any Internet or other high-tech offerings. Brokers have cautioned that the word Internet in a company's marketing materials or prospectus does not translate to instant profits.
Nevertheless, Peterson said, improved market conditions and money managers with more flexible portfolios are driving the surge. "In midsummer, money managers didn't have a lot of excess cash to work with. But now they're readjusting their portfolios, and if they're a small-cap or growth-fund manager, they're looking at technology issues."
Not all is optimistic in this future, however. This week's stampede will also include all the companies that were forced to delay their plans after the high-tech market suffered a temporary breakdown this summer.
"The market went down substantially in the early part of the second quarter, so companies that were considering an IPO either went with a smaller offering or postponed it," said Jim Smith, senior director of business development with Nasdaq. "So what we're seeing now is a backlog of companies unleashing their IPOs."
Companies have historically launched IPOs before the slow summer season, when most industries encounter a lull in business. If they miss that timing, IPO candidates often wait until the fall when they still have the attention of institutional investors before taxes consume their interest in the fourth quarter.