IPO market crammed with chips, Linux companies

InSilicon, Blaze Software and Linux company Caldera Systems are among the initial public offerings that could perform well, assuming that the overall markets remain healthy.

The Dow Jones industrial average on Friday posted a record one-day gain of 499 points, as investors continued to pour money into "old economy" companies that had lagged for much of the year. The Nasdaq composite index went along for the ride, as a modest rise put the brakes on a three-day slide that shaved nearly 10 percent from the index.

Despite the volatility, some IPOs posted respectable first-day gains.

Semiconductor maker Infineon Technologies gained 160 percent, an unusually strong move considering the size of the deal, said Jeff Hirschkorn, senior analyst at IPO.com. The company raised $5.2 billion with the offering.

The best performer last week, as measured by first-day gain, was auction software and network provider FairMarket, which soared 185 percent.

This week, the markets will be at the mercy of the Federal Reserve, which will meet to consider an interest rate hike. Wall Street expects a quarter-point increase. Anything larger could roil the markets, particularly the IPOs being handled by some smaller underwriting firms, said Hirschkorn.

In early trading today, the Dow Jones Industrial Average continued its climb, rising 105.8 to 10,701. The Nadsaq traded lower, however, down 42.18 to 4,755.95.

Seventeen IPOs are scheduled for this week, and combined could raise up to $2.2 billion.

InSilicon licenses its semiconductor components to some of the largest chipmakers, ranging from Intel to Advanced Micro Devices.

"The company was only formed in 1999, but it already has 400 clients," Hirschkorn said. "They should do well because semiconductors have been hot."

The Philadelphia semiconductor index is up about 70 percent since the start of the year and has managed a rapid ascent despite softness in the markets earlier this year.

InSilicon generated $5 million in revenues during the three-month period ending Dec. 31, and posted a loss of $991,000.

The company hopes to raise up to $38.5 million based on the high end of its $9 to $11 pricing range and 3.5 million shares it plans to sell, according to filings with the Securities and Exchange Commission. The company will trade under the ticker "INSN." Robertson Stephens is the lead underwriter.

Blaze Software, which provides customized software to big corporations for e-commerce applications, is expected to garner investor interest because of the large gains posted by its competitor when it debuted, Hirschkorn said. Art Technology Group, which priced at $12 last year, gained 51 percent on its first day.

"There is excessive demand for these type of companies. Blaze will be one of the hottest deals," he said.

The company reported revenues of $11.7 million for the nine-month period ending Dec. 31, up from $6 million a year earlier. Its customers include PlanetRx, Prudential Insurance and Sun Microsystems. Blaze's net loss widened to $17 million in the period from $4.8 million a year ago.

The company is expected to raise up to $56 million, based on the high end of its $12 to $14 price range and the 4 million shares it will sell, according to SEC filings. The company will trade under the ticker "BLZE," and Robertson Stephens is the lead underwriter.

As previously reported, Caldera Systems, which sells a version of the Linux operating system, has increased its pricing range and pushed its debut to this week.

The Linux software company increased its range to $10 to $12 a share from $7 to $9, typically an indicator of strong investor interest. The company hopes to raise up to $60 million, based on the high end of its range and 5 million shares it will offer.

Caldera is the fifth Linux-related company to raise its range prior to selling the shares. Hirschkorn said he expects the company to raise the price range again prior to launching its IPO.

But although Linux is considered a hot sector, not all Linux IPOs have performed well after their debut. VA Linux Systems, for example, posted the largest one-day gain last year, but the stock has lost about half its value since then.

Nonetheless, Caldera, like the other Linux companies, is expected to post a healthy first-day gain, Hirschkorn said.