Telekom Austria AG and Alliance Fiber Optic Products
Telefonica Moviles has applied to trade on the New York Stock Exchange under the ticker symbol "TEM." Banco Bilbao Vizcaya, a Spanish investment bank, will handle the sale along with Credit Suisse First Boston.
The second deal comes from Telekom Austria, Austria's largest telecommunications company. Telekom Austria plans to raise $2.5 billion
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Telekom Austria provides traditional fixed-line telephone services, local and long-distance, as well as dial-up Internet access and data communications. It is 75 percent-owned by the Austrian government and 25 percent-owned by Telecom Italia.
The company has applied to trade on the New York Stock Exchange under the ticker symbol "TKA." Merrill Lynch will handle the sale.
Both Telefonica Moviles and Telekom Austria face a number of obstacles to strong first-day performances. To begin with, large offerings tend to curb demand with an overabundance of supply: Of the 13 billion-dollar deals that have debuted this year, seven are trading at even or less than their offering prices.
"Big size doesn't portend well for performance," said Richard Peterson, an analyst with Thomson Securities Financial Data. "The best performer in terms of tech IPOs of a billion dollars or more is Infineon (a German-based semiconductor company), and that's up only 15 percent from its offering price."
Then there's the recent tumble by foreign telecommunications companies. Shares of Telefonica, the parent company to Telefonica Moviles, have fallen 12 percent since the beginning of October. Shares of UnitedGlobalCom, a Pan-European broadband communications company, have dropped 22 percent in the same period, while shares of TeleDenmark, a Danish telecommunications company, have tumbled the same amount. Shares of KPN, the Netherlands' leading telecommunications company, have fallen 27 percent.
"In general, the market for telecom stocks, specifically international telecom stocks, has been terrible," said Steven Tuen, a portfolio manager with the Kinetics Internet Fund. "I think the total effect will be a very muted opening for both of these companies."
Telekom Austria and Telefonica Moviles will also have to contend with an abbreviated week because of the U.S. Thanksgiving holiday. The stock market will be closed Thursday and open for only a half-day Friday.
Still, not all telecommunications companies that have gone public have suffered drops in their stock prices. AT&T Wireless is down only $1 from its October trading price, while Vodafone is up about 40 cents.
In all, five companies plan to raise a total of $2.9 billion in U.S markets next week, with $2.7 billion coming from the two foreign telecom deals, according to New York-based market research firm CommScan. Following are two of the other offerings scheduled for next week:
ImagicTV, which makes software to deliver multichannel digital TV, hopes to raise as much as $61.8 million through the sale of 4.75 million shares at a range of $11 to $13. Investors bullish on this company have high hopes for the interactive TV market, which has yet to be embraced by the mass market but by some accounts is moving in that direction.
iMagicTV generated revenues of $3.6 million during the six-month period ended Aug. 31, up from $216,000 a year ago. The company's loss widened to $5 million from $2.4 million the previous year. The company has applied to trade under the ticker symbol "IMTV." Merrill Lynch and Chase Hambrecht & Quist will handle the sale.
Alliance Fiber Optic, which makes fiber-optic components for optical networks, plans to sell 4.5 million shares at a range of $11 to $13. The company reduced the number of shares from an initial 6.25 million. The company has applied to trade under the ticker symbol "AFOP." Merrill Lynch and U.S. Bancorp Piper Jaffray will handle the sale.