IPO market remains on ice as summer nears
As the summer months approach, the number of initial public offerings is starting to dry up as only a few companies are on tap to brave the market next week.
Analysts say that this year's IPOs haven't fared well since the Nasdaq hit its peak in March. Since then, IPOs have gained, on average, 40 percent from their original price on the first day of trading. In contrast, the first three months of the year saw issues skyrocket more than 118 percent from their starting price upon debut.
"There's no overriding or overwhelming reason" for investors to get into the IPO market right now, said Richard Peterson, a market strategist at Thompson Financial.
Yet a few brave companies are ready to roll out next week. One stock to watch will be ONI Systems, the San Jose, Calif.-based maker of optical networking equipment. The company raised its price range to $21 to $23 per share last week, a 50 percent increase from its previous range of $14 to $16.
Other issues to follow are wireless phone service provider UbiquiTel and European high-speed Net provider Chello Broadband.
Companies focusing on the hot networking sector have performed well, even in a volatile market. Sonus Networks, a supplier of networking software and equipment nearly doubled on its first day of trading this week, jumping to a high of $51.62 from its offering price of $23.
Analysts say ONI may be able to ride the same enthusiasm as Sonus, saying that the share price range increase is a good sign of strong demand.
"Underwriters do not do a price increase in such a soft and tenuous market frivolously," David Menlow, president of IPOfinancial.com, said.
ONI plans to offer 8 million shares, and raise $176 million based on the high end of its price range. Last year, the company generated $3.03 million in revenue.
"Generally, I think things in the optics (industry) are going to be well received," said Ted Moreau, an analyst at Robert W. Baird who covers Lucent Technologies and Nortel Networks. "The (market) adjustment has been made, so I would expect investors would respond to a reasonably priced offering."
Wireless phone service provider UbiquiTel is also scheduled to go public next week. The wireless company follows in the wake of AT&T Wireless, which raised $10.6 billion in one of the largest U.S. public offerings to date. The company offers wireless service in various states in the western and northwestern United States.
"UbiquiTel is affiliated with Sprint PCS, so that agreement gives them a nationwide scale," said Chris Larsen, an analyst who covers the wireless industry at Prudential Securities.
Larsen also sees a solid future for the wireless industry as a whole. 
"The price per minute is going down, but the increase in overall usage and revenue should more than compensate for that."
UbiquiTel plans to offer 14.5 million shares between $12 to $14 per share. Earlier, lead underwriter Donaldson, Luftkin & Jenrette had planned to offer only 12.5 million shares, but at a higher range, between $13 to $15 per share. The company now plans to raise $188 million, based on the high end of its revised range.
Chello Broadband of the Netherlands hopes to raise $369 million in its initial offering next week. The company is expected to price shares between $11.88 to $15.33. Goldman Sachs and Morgan Stanley Dean Witter are jointly managing the IPO.
Chello, a broadband Internet service provider that operates in Europe, will offer about 10 percent of the company. Microsoft and Liberty Media plan to purchase an additional 7 percent stake.
Chello reported $7.4 million in revenue last year and $140 million in losses. At the end of its first quarter in March, the company reported 171,000 paying subscribers, a 367 percent increase over the last 12 months.
The company offers service in six European countries, including Norway, Sweden, Austria, France, Belgium and the Netherlands. The service is also available in Australia through a broadband wireless system.