IPO investors thankful for Fridays
As several tech companies prepare initial public offerings next week, Akamai Technologies is one issue that some analysts expect will do particularly well.
The Dow Jones Industrial Average lost 266 last Friday, capping a week in which it plunged 630 points. But the first day of trading for Women.com, a Web portal geared toward women, couldn't have gone much better.
The shares closed last Friday at 18.5, 85 percent higher than their initial $10 price. Volume was an astounding 12.4 million shares.
This week, IBM rattled the market with a warning that earnings could decline in future quarters. The news caused the Dow to sink more than 200 points, although the loss was later cut by more than half.
The anxiety had no apparent impact on Sycamore Networks. In first-day trading today, Sycamore shares soared to more than 270 before settling back to close at 184.75. They priced yesterday at $38.
Sycamore's success could create momentum going into next week's crowded IPO calendar.
"This is one of the stronger weeks for IPOs. I haven't seen many postponements out of this bunch," said Richard Peterson, an IPO analyst with Securities Data.
About 20 companies are slated to launch IPOs, and Akamai Technologies is one issue that some analysts expect will do particularly well.
Akamai, which helps speed the delivery of Web sites, recently increased its pricing range and the number of shares it will sell because of investor demand.
The company increased its range to $16 to $18 a share, up from its original range of $11 to $13. The company also will offer 8 million shares, up from 6 million.
"If you look at the deals this year, 25 percent of them have increased their range by 20 percent. And of those deals, they averaged over a 130 percent gain on their first trading day," said Peterson. "Akamai raised their range in the 40 percent level, so I'm looking at Akamai to close around $40 a share on its first trading day."
Akamai could raise $144 million, based on the high end of its pricing range. The company expects to price its shares Thursday and to begin trading Friday under the ticker "AKAM."
Akamai has several industry giants in its corner. For example, Cisco Systems in August entered into a strategic alliance with the company to develop new content routing, switching, and caching technologies to accelerate the delivery of Web content.
Cisco also purchased Akamai's Series E convertible preferred stock for roughly $49 million.
Meanwhile, Microsoft last September agreed to invest $15 million in Akamai, giving the software giant about a 1 percent stake in the company.
Under the alliance, Akamai said it will develop a version of its computer server software to run on Microsoft's Windows NT operating system. That would expand its existing use from running on Linux. Microsoft agreed to purchase Internet content delivery services from Akamai for its Streaming Media division.
Other IPOs on tap for next week include Chartered Semiconductor and InterTrust Technologies.
Chartered Semiconductor, a Singapore-based independent semiconductor foundry, is looking to raise up to $405 million, based on the high end of its $16 to $18 a share pricing range and the 22.5 million shares it plans to offer.
The company generated $183 million in revenues for the quarter ended September 30, up from $84 million a year ago. Its net loss was $6.2 million for the quarter, compared with a loss of $52.7 million the previous year.
Earlier this year Chartered teamed with Motorola and Hewlett-Packard to form a manufacturing alliance. Under the deal, Motorola planned to license its silicon wafer chip technology to the other companies.
Chartered expects to price Thursday and begin trading Friday under the ticker "CHRT." Salomon Smith Barney is the lead underwriter.
InterTrust Technologies, a security software maker whose products work with digital information, hopes to raise up to $56 million.
The company has a pricing range of $12 to $14 a share and plans to float 4 million shares. InterTrust expects to price Tuesday and begin trading Wednesday under the ticker "ITRU."
During the six-month period ending June 30, the company generated $486,000 in revenues, up from $50,000 a year earlier. Its net loss widened to $11.4 million, vs. a loss of $9.4 million a year ago.
InterTrust eventually plans to raise revenues by collecting transaction fees for items and services pumped through its commerce system. The company already has partnerships with such music titans as BMG Entertainment and the Universal Music Group.
Credit Suisse First Boston is the lead underwriter.