TyCom may become the newest member of this year's billion-dollar club when it debuts Thursday on the Nasdaq Stock Market. The underwater fiber-optics network company seeks to raise $1.3 billion. Underwritten by Goldman Sachs, it plans to trade under the ticker "TCM."
In addition to TyCom, 27 other IPOs this week are expected to raise a total of $3.7 billion. Notable deals include Avici Systems and Lexent.
TyCom will mark the 10th billion-dollar IPO to debut so far this year. During the same period last year, eight companies had IPOs worth more than $1 billion, according to Thomson Financial/Securities Data. If the pace continues, the number of IPOs this year will overshadow the 16 deals in excess of $1 billion last year.
Analysts are bullish that TyCom will raise at least $1 billion. Pricing will be set Wednesday.
"TyCom isn't another dot-com play. It's Act II of the infrastructure build-out, which is a hot area," said Gail Bronson, senior analyst with IPO Monitor.
The Bermuda-based company generated $135.2 million in profits during the three-month period ended March 31, up from $77.4 million a year ago. Revenue rose to $1.3 billion in the quarter from $699.3 million a year earlier.
Despite TyCom's large size, the company has managed to increase the terms of the deal by 30 percent. TyCom is looking to offer 43.5 million shares, with a pricing range of $26 to $30 a share. That deal was increased from 40 million shares with a range of $20 to $25.
"Even though it's a large deal, it should do really well because of the market's recent performance, and it won't be a tracking stock for its parent company," said Jeff Hirschkorn, senior analyst with IPO.com.
TyCom plans to have the transatlantic portion of its network's first phase operational during the second half of next year. And the remainder of its first phase, the transpacific and European areas, will be completed by late 2002.
Once the first phase is finished, TyCom will connect 27 major telecommunication centers around the world from New York to Hong Kong.
As the market has regained momentum from its steep sell-off this past spring, companies are increasingly able to debut above their initial IPO price ranges. Ten deals went out last week, of which eight priced above their ranges.
Other deals scheduled to debut this week include high-speed data networking company Avici Systems and telecom services provider Lexent.
Avici seeks to raise up to $120 million, based on the high end of its $18 to $20 pricing range and 6 million shares it will offer.
|IPOs that raised over $1 billion during 2000|
|Company||IPO size||IPO price||First day
|AT&T Wireless||$10.6 bil||$29.50||7.8%||$27.44|
|Sun Life Financial||$1.2||$8.50||10%||$17.44|
The early-stage company is in a sector in which investors have shown their support. Competitor ONI Systems, for example, priced at $25 in June and gained 230 percent on its first trading day. Friday, the stock was trading above $100.
Hirschkorn added that two of Avici's larger clients have agreed to purchase equipment worth $45 million through 2001, and one of the customers, Williams Communications, will take about an 11 percent stake in the company.
Avici posted a loss of $16.7 million in the quarter ended March 31 on revenues of $504,000. The company, which is being underwritten by Morgan Stanley Dean Witter, will trade under the ticker "AVCI."
Lexent, which provides telecom services to local telephone companies and ISPs, is also in an industry where competitors have performed well on their debut.
But IPO analysts said that Lexent's revenues come from a steady source.
"Last year, over 80 percent of Lexent's revenues came from repeat customers," Hirschkorn said. "And their revenues are expected to rapidly grow since they're a wireless play."
During the March quarter, Lexent generated revenues of $56.2 million, up from $20.2 million a year earlier. The company posted a loss of $8.9 million in the quarter, compared with a gain of $964,000 a year ago.