IPO feast expected to continue
A strong market for initial public offerings means the Thanksgiving-shortened week will remain busy for investors.
Investors looking for a little action this week will find twice as many IPOs slated for the usually slow Thanksgiving week compared with last year. And despite the holiday timing, investors may find themselves dishing up an upside surprise, IPO analysts note.
"There are 11 deals in the hopper, and I expect nine to do really well. They are quality deals," said Jeff Hirschkorn, senior analyst with IPO.com. "We won't see the blockbusters like Agilent or [United Parcel Service]." Instead, the offerings will be similar to recent IPOs--companies with lots of potential but little history.
Agilent soared more than 40 percent on its first day of trading last week, and UPS set a record earlier this month for raising the most capital when it attracted $5.4 billion.
IPOs tend to suffer a slowdown during the week of Thanksgiving, as investment bankers grow nervous that there won't be enough investor support to carry a strong offering, Hirschkorn said. Compounding that is a concern that many institutional investors already have their funds set in place for the remainder of the year.
But this year, the strong market has investment bankers feeling more confident that buyers will line up for the shares. The pipeline through the end of the year also appears to be full.
According to David Menlow, president of IPO Financial Network, there are about 74 IPOs on the calendar that could reach the market by the end of the year.
"We have fewer deals overall in the system this year, but more deals that have made it to the calendar," Menlow said. "And the market right now has all the right underpinnings for a strong closeout for '99."
OpenTV, one of the largest interactive TV service providers, with more than 4.5 million subscribers worldwide using its software, is one of the companies analysts expect will add to an already strong year.
The company raised its pricing range to $18 to $20 a share from $14 to $16 last week and also increased the number of shares it will sell to 7.5 million from 7 million.
OpenTV, which is seeking to raise up to $150 million in capital, is expected to price today and begin trading tomorrow under the ticker "OPTV." Merrill Lynch is the lead underwriter.
"Software for interactive TV is an up-and-coming industry," said Hirschkorn, noting the IPO performance of OpenTV's competitors.
Wink Communications priced at $16 a share in August and has climbed about 175 percent. Liberate Technologies priced at $16 in July and has since soared to about 154.
OpenTV generated revenues of $17.6 million during the nine-month period ending Sept. 30, compared with $6.1 million a year ago. Its losses declined to $8.5 million, compared with a loss of $10.6 million a year earlier.
"The company has no profits, but its losses were small and its sales have grown," Hirschkorn said.
He added that he also likes OpenTV's parent company, MIH, which will hold a 70 percent stake after the IPO, and its investor Sun Microsystems, which will retain a 19.5 percent stake. Other investors include America Online, General Instrument, Liberty Digital, News Corporation and Time Warner.
In October, the company announced it will team with AOL to jointly develop the online giant's applications to run on its software.
Deltathree.com, a global provider of Internet Protocol telephony services, is also expected to emulate the successful IPOs of its competitors Net2Phone and iBasis, Hirschkorn said. Net2Phone priced at $15 a share in July and is trading around 62. iBasis, which went public earlier this month, priced at $16 and is up to about 33.
Deltathree operates a communications portal that allows customers to make calls and send email from any point on the globe, as well as retrieve and forward voice mail, email and faxes.
It generated $6.4 million in revenues during a nine-month period ending Sept. 30, compared with $3.7 million a year ago. Its net loss grew to $17.5 million for the period, compared with a loss of $4.6 million the previous year.
The company plans to raise up to $65 million based on the high end of its $11 to $13 pricing range and 5 million shares offered. The company expects to price today and begin trading tomorrow under the ticker "DDDC." Lehman Brothers is the lead underwriter.