IPOs face uphill battle next week
Analysts are already writing the obituaries of the seven initial public offerings scheduled to debut next week, anticipating across-the-board withdrawals, postponements or price cuts.
The pessimism about the fate of newly public companies reflects the selling wave that has swamped scores of more established tech companies in the past several weeks. On Thursday, the Nasdaq reached a 15-month low, closing at 2,597.92, nearly half its peak value of 5,048.62 in March.
"Even if there is a calendar (next week), I doubt anything will get done," said Vincent Slavin, who tracks IPOs for Cantor Fitzgerald. "In what's going on in the broader market, I think that arena will be closed down--probably for the rest of the year. A few deals might get done, but they will have to be pretty spectacular to get any premium."
Because of the weak conditions, just one IPO, Rigel Pharmaceuticals, made its way to the market this week, gaining a mere 7 cents in first-day trading to close at $7.11. At least five other companies withdrew their offerings, including online retailer PetsMart.com and business-to-business marketplace Telcobuy.com.
Perhaps foreshadowing next week, Norway's leading telecommunications company, Telenor, slashed its price range Friday by more than $3, to a range of $13.57 to $14.86 instead of $16.85 to $21.25. The share sale represent the largest offering of the week, with the stock scheduled to begin trading next Monday.
November has been a rough month for IPOs. The 18 completed offerings rose an average of 17 percent in their first day, compared with an average gain of 56 percent for all IPOs so far this year, according to New York-based market research firm CommScan.
November IPOs have fallen an average of 5 percent from their offering price, compared with a 20 percent average loss for the 386 IPOs this year.
This is a partial listing of the IPOs slated to begin trading next week:
• Norway telecommunications company Telenor is by far the largest deal on next week's calendar. The company, which provides both fixed and wireless phone service, as well as TV-based broadband and Internet services, plans to sell 124 million American depository shares at a reduced range of $13.57 to $14.86. Sixty-two million ADSes (equal to about 124 million shares) will be sold in U.S. markets.
Telenor traces its roots back to 1855 and employs 25,600 people, according to Renaissance Capital. The company has applied to trade on the Nasdaq under the ticker symbol "TELN." Goldman Sachs will be the lead underwriter for the sale.
• Gemplus International, which makes smart card-based products for security and mobile applications, plans to sell 39.2 million ADSes, or 78.4 million shares, at a range of $12.35 to $14.05. The company's products secure applications including financial transactions, pay TV, and Web-based and mobile commerce.
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Gemplus has applied to trade on the Nasdaq under the ticker symbol "GEMP." Credit Suisse First Boston and UBS Warburg will handle the sale.
• Garmin, a maker of navigation devices based on global positioning system (GPS) technology, plans to sell 10.5 million shares at a range of $15 to $17. The company's handheld and portable products are sold to outdoor enthusiasts as navigation tools for hiking, camping, boating, flying or even navigating city streets. The company's equipment has been used by boat maker Ranger and airplane builder New Piper.
Headquartered in Kansas, the company was founded in 1989. According to Hoover's, a business-information publication, its co-chairmen and co-CEOs Min Kao and Gary Burrell each own almost a quarter of the company.
Garmin has applied to trade on the Nasdaq under the ticker symbol "GRMN." Credit Suisse First Boston and Merrill Lynch will handle the sale.