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Looking back at high-tech IPOs

This year set records for high-tech IPOs, but that doesn't mean each one was welcomed on Wall Street with the same enthusiasm.

This year set records for high-tech IPOs, but the fact that lots of companies went public this year doesn't mean each one was welcomed on Wall Street with the same enthusiasm.

A survey of some 222 technology issues that went public this year shows that some investors in information technology are closing out the year with a more than a 200 percent gain, while others are in the hole by 90 percent, according to Securities Data, a research firm.

Although some high-profile companies went public this year--including nearly all of the big-name search engines like Yahoo and Excite--some of the most successful IPOs were companies with much less name recognition.

Paravant Computer Systems (PVAT) topped the list of the top-ten technology IPOs for 1996, according to Securities Data. On the other end of the scale, the worst performer on the list of 200 companies was n-Vision (NVSN).

Securities Data came up with the ranking by comparing the companies' IPO prices and their subsequent growth or decline to the performance of the Nasdaq market during the same period.

Richard Peterson, IPO analyst for Securities Data, said 1996 saw strong growth among the newly launched companies compared to previous years.

"We saw more doubling in growth than in previous years," he said. "That's great for investors who got in on the bottom floor, but for companies, it may mean their bankers underpriced the deal."

This year was also marked with more IT offerings than previous years; 222 issues raised $11.8 billion, up from 190 issues generating $8.1 billion the previous year. The average price, however, was down to $11.82 a share, compared with $12.45 a share in 1995, Peterson said.

Technology companies that went public earlier in the year got a boost from the hot market for tech IPOs in April and May, when many companies saw their stock rise 25 percent on the first day of trading, Peterson said.

But then the market clamped down in the summer as investors got skittish over companies that sizzled but offered no real meat in their financial performance--companies like the search engine vendors whose stock tumbled drastically after high-profile launches.

Offerings perked up again in October for a record month of 100 deals in 30 days. But unlike earlier in the year, investors sought out tech companies that came to the market in a strong financial condition.

Paravant, which designs and manufacturers rugged portable PC systems for outdoor use by the military, medical industries, and field data collectors, has seen its stock rise 235.7 percent in relation to Nasdaq since its offering in June. The stock has also undergone two splits since its rollout price of $5 a share.

In comparison, n-Vision's stock has dropped 91.6 percent in relation to the Nasdaq since it went public in late May priced at $5 a share. The company says it needs an advocate on Wall Street to improve its performance.

"Our underwriter was barred from trading two weeks ago, so we have no one trading the stock," said n-Vision president Christopher Lewis. "I don't expect our stock to do anything at all until someone represents us on Wall Street."

Stratton-Oakmont served as principal underwriter and market maker for the company's shares. Lewis said the company is currently seeking another underwriting firm, but doesn't know how long that will take.

Another lagging company is VocalTec (VOCLF), which started its first day of trading below its initial price of $19 a share. The Internet phone company has never recovered since its IPO in February and is down 82.89 percent in relation to Nasdaq.

"Our red herring had an offering range of $16 to $18 a share, but our bankers recommended $19 because of the demand," said Elon Ganor, chairman and chief executive. "The offering was successful, but I don't know why it went down."

He added that the sudden drop in the stock price was not a reflection of investor concern over the company's performance because it happened too soon after the IPO rollout.