Upcoming IPOs: All is quiet before the storm
Summer vacation continues as the markets enter a second week without any scheduled initial public offerings.
But as the Nasdaq creeps back up to its July 17 high of 4,274, a flood of new offerings is expected to barrage the market in September. Many companies decided to hold off on IPOs as the market stagnated. The market has a backlog of approximately 287 companies that have filed to go public in the past six months but failed to do so.
A total of 27 companies are slated to begin trading this month, according to Renaissance Capital, but some experts predict this number will pick up to match the 20 to 30 per week of offerings seen in the early weeks of August.
"Come post-Labor Day, you're going to see 40-plus IPOs scheduled," said Mark Dicioccio, head of the West Coast Technology Group for Lehman Brothers' investment banking team. "There's a tremendous backlog."
So far, however, there are no IPOs scheduled for next week, and just two are slated for the week of Sept. 11. Analysts say this slow September start will give investors a chance to ease back into an IPO market that was saturated for much of August.
"The underwriters might want to restrict supply a little bit just to ensure that the market isn't saturated," said Randall Roth, an analyst with the Renaissance Capital IPO Plus Aftermarket Fund. "There's been so much supply out there, and the aftermarket performance has just been bad."
Analysts say that Cosine Communications, which provides network service providers with switches and software, is a worthwhile company to watch as it heads into the public market around Sept. 25. The company plans to raise $140 million through the sale of 10 million shares at a range of $13 to $15.
Two of Cosine's competitors more than doubled in their May IPOs, despite struggling market conditions.
Sonus Networks rocketed up 119 percent to close at $50 in its May 25 IPO. It was trading at $165.81 today.
Optical components maker ONI Systems doubled to $51 in its May 18 IPO. ONI traded at $103.63 today.
"This whole area has been strong," Roth said.
Cosine has applied to trade on the Nasdaq under the ticker symbol "COSN." Goldman Sachs will lead manage the sale.
Simple Technology, which makes DRAM, SRAM and flash memory for PCs, laptops, digital cameras and other devices is another IPO analysts advise investors to watch. A major shortage of capacitors, flash memory, liquid crystal displays (LCDs) and computer microprocessors has resulted in record orders for many parts suppliers.
"These devices need more and more memory, especially PDAs (personal digital assistants) and smart phones, to do all the whiz-bang things that all the carriers are promising," Roth said.
Simple Technology plans to raise $70 million through the sale of 6.36 million shares at $10 to $12. The company has applied to trade on the Nasdaq under the ticker symbol "STEC." Lehman Brothers will lead manage the sale.